STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20)
STATE OF CALIFORNIA
Department of Financial
Protection and Innovation
GUIDELINES
FOR
FRANCHISE REGISTRATION
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR
FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 2 of 84
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
STATE OF CALIFORNIA
GUIDELINES FOR THE UNIFORM FRANCHISE DISCLOSURE DOCUMENT (“UFDD”)
REQUIRED FOR THE UNIFORM FRANCHISE REGISTRATION APPLICATION
1. Prominent disclosures:
a. The preface, exhibit or appendix of the Disclosure Document shall contain:
THE CALIFORNIA FRANCHISE INVESTMENT LAW REQUIRES THAT A COPY OF ALL
PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE BE
DELIVERED TOGETHER WITH THE DISCLOSURE DOCUMENT.
b. Any advertisement that refers to the registration under the Franchise Investment Law shall
contain the following in not less than 10 point type:
THESE FRANCHISES HAVE BEEN REGISTERED UNDER THE FRANCHISE
INVESTMENT LAW OF THE STATE OF CALIFORNIA. SUCH REGISTRATION DOES
NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE
COMMISSIONER OF FINANCIAL PROTECTION AND INNOVATION NOR A FINDING
BY THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE,
COMPLETE AND NOT MISLEADING.
2. “Salesman Disclosure Form” and Item 3.A of the Body of the UFDD: In an initial application to
register the offer and sale of a franchise, do not disclose a pending action involving an arrest
that did not result in conviction or plea of nolo contendere.
3. Item 3.C of Body of the UFDD: In addition to the information required by Item 3.C, state
whether the franchisor, any person or franchise broker in Item 2 of the UFDD is subject to any
currently effective order of any national securities association or national securities exchange,
as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or
expelling such persons from membership in such association or exchange. The information
required by this provision may be included in Item 3 or in a preface, exhibit or an appendix,
which is part of the Disclosure Document. If the information is set forth in a preface, exhibit or
an appendix, a reference to the preface, exhibit or appendix shall be prominently set forth in
Item 3.
4. Item 5: If the initial fee can vary, include a mathematical formula which enables the franchisee
to calculate the specific dollar amount of the franchise fee.
5. Item 17: Additional Paragraph(s) Required. The paragraph(s) required by this provision may
be included in Item 17 or set forth in a preface, exhibit or appendix, which is part of the
Disclosure Document. If the paragraph(s) are set forth in a preface, exhibit or appendix, a
reference to the preface, exhibit or appendix shall be prominently set forth in Item 17.
a. In addition to the information required by Item 17, all Disclosure Documents shall contain
the following paragraph:
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 3 of 84
b. California Business and Professions Code sections 20000 through 20043 establish the
rights of the franchisee concerning termination, transfer or non-renewal of a franchise. If
the franchise agreement
contains a
provision that is inconsistent with the law, the law will
control.
c. If the franchise agreement contains one or more of the provisions referred to in the
following paragraph(s), the appropriate paragraph(s) shall be included:
i. The franchise agreement provides for termination upon bankruptcy. This provision may
not be enforceable under federal bankruptcy law (11 U.S.C.A. § 101 et seq.).
ii. The franchise agreement contains a covenant not to compete which extends beyond
the termination of the franchise. This provision may not be enforceable under
California law.
iii. The franchise agreement contains a liquidated damages clause. Under California Civil
Code section 1671, certain liquidated damages clauses are unenforceable.
iv. The franchise agreement requires binding arbitration. The arbitration will occur at
(indicate sites) with the costs being borne by (explanation).
Prospective franchisees are encouraged to consult private legal counsel to determine
the applicability of California and federal laws (such as Business and Professions Code
section 20040.5, Code of Civil Procedure section 1281, and the Federal Arbitration Act)
to any provisions of a franchise agreement restricting venue to a forum outside the
State of California.
v. The franchise agreement requires application of the laws of (indicate jurisdiction). This
provision may not be enforceable under California law.
6. Item 19: If any earnings claim is made, and the earnings claim figure(s) does (do) not include
either costs of sales or operating expenses, then, in addition to the information required by
Item 19, all Disclosure Documents shall contain the following statement prominently set forth
in Item 19 or set forth in a preface, exhibit or appendix, which is part of the Disclosure
Document. If the statement is set forth in a preface, exhibit or appendix, a reference to the
preface, exhibit or appendix shall be prominently set forth in Item 19: “The earnings claims
figure(s) does (do) not reflect the costs of sales, operating expenses, or other costs or
expenses that must be deducted from the gross revenue or gross sales figures to obtain your
net income or profit. You should conduct an independent investigation of the costs and
expenses you will incur in operating your (franchised business). Franchisees or former
franchisees, listed in the Disclosure Document, may be one source of this information.”
7. NOTE: Civil Code § 1189 requires that any notary’s certificate of acknowledgment taken
within this state must be in the form attached. Any certificate of acknowledgment taken in
another state shall be sufficient in California if it is taken in accordance with the laws of the
state where the acknowledgment is made. In that instance only, the current NASAA form
would be acceptable in California.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE
REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 4 of 84
8. As of January 1, 2008, California Corporations Code section 31119 requires that the franchise
disclosure documents together with all proposed agreements relating to the sale of the
franchise be delivered to prospective franchisees at least 14 days prior to execution by the
prospective franchisee of any binding franchise or other agreement, or at least 14 days prior to
the receipt of any consideration, whichever occurs first.
9. As of January 1, 2008, California Corporations Code section 31155 requires that all applicants
for registration, except for California corporations, California limited partnerships, or California
limited liability companies, file an irrevocable consent appointing the Commissioner to be the
applicant’s attorney to receive service of any lawful process in any non-criminal suit, action, or
proceeding against the applicant which arises under the Franchise Investment Law.
10. As of July 1, 2008, only the UFDD can be used as the offering document to offer and sell
registered franchises in California, regardless of when the franchisor registered its franchise
system and regardless of any prior registration involving a UFOC.
11. As of July 1, 2013, the Department of Corporations changed its name to the Department of
Financial Protection and Innovation. All required forms and disclosures should reference the
Department of Financial Protection and Innovation and the commissioner of Financial
Protection and Innovation as applicable.
12. As of June 18, 2014, the Department retired the Cal-Easi database and replaced it with the
DOCQNET Self-Service portal. (see www.dfpi.ca.gov). Please note that Cal-Easi database
provided a permanent identification number for each entity known as a file number and a
specific identification number for each filing as a package number. In DOCQNET the
permanent identifier is called an organization identification number (Org ID) and the specific
identifier for each filling is an application identification number (App-1234).
13.As of January 1, 2015, California Corporations Code sections 31116 and 31121 have been
amended. The amendment changes the automatic effective date to the 30
th
business day after
the filing of a complete application for registration or the last pre-effective amendment. A
complete application means an application that contains the appropriate filing fee, UFDD and
all additional exhibits including financial statements in conformity with regulations of the
commissioner.
14. If the franchise being offered in California involves a multi-unit franchising structure, the
franchisor must use either the terms defined in (1) California Corporations Code sections
31008, 31008.5 and 31009 or (2) the definitions adopted by the North American Securities
Administrators Association, Inc.‘s Multi-Unit Commentary (“Multi-Unit Commentary”) adopted
September 16, 2014: Area Development/Area Developer, Subfranchise Rights/Subfranchisor
and Area Representation/Area Representative.
15. If the commercial arrangement involves a multi-unit franchising structure that meets the
definition of an Area Representation arrangement or a Subfranchise arrangement under the
Multi-Unit Commentary, the franchisor must file a separate application for registration with a
separate Uniform Franchise Disclosure Document (“UFDD”).
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION
AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 5 of 84
16. If a franchisor includes multiple brands within a single UFDD, the commissioner will require a
separate application for registration with a separate UFDD for each brand if the Commissioner
determines that combining the brands in the same UFDD would be confusing or misleading to
prospective franchisees.
17. Compliance guidance is available by email at ask.dfpi@dfpi.ca.gov or at 1-866-275-2677.
18. All filing forms are available for download on the Department of Financial Protection and
Innovationt’s website at http://www.dfpi.ca.gov/Licensees/franchise_investment_law/
Forms.asp
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 6 of 84
CALIFORNIA FRANCHISE REGISTRATION
1. FEES:
Franchise Registration $675
Renewal Franchise Registration $450
Post-Effective Amendment $50
Pre-effective Amendment No Fee
Material Modification $50
Notice of Violation $675
Make check payable to “
California
Department of Financial Protection and Innovation”
2. SEND YOUR APPLICATION TO:
3. COVER LETTER:
Please acknowledge in your application cover letter whether any documents or exhibits will be
submitted at a later time. If the franchisor offered or sold securities in California under the
California Corporate Securities Law of 1968, the franchisor must describe these transactions in
the cover letter and indicate whether the securities were qualified or exempt and/or make any
required filings.
The cover letter should tell the Department the date of the franchisor’s fiscal year end, and
acknowledge that the registration will generally end 110 days after the date of its next fiscal
year. This will coordinate registration renewal with the required fiscal year end audited
financial statements, and will reduce the need to submit interim statements.
CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
320 WEST
4
TH
STREET, SUITE 750
LOS ANGELES,
CA 90013-2344
OR
CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
ONE SANSOME STREET, SUITE 600
SAN FRANCISCO, CA 94104-4428
OR
CALIFORNIA DEPARTMENT OF FINANCIAL PROTECTION AND
INNOVATION
2101 ARENA BLVD
SACRAMENTO, CA 95834
STATE OF CALIFORNIA –
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 7 of 84
4.
FORMS FOR THE FRANCHISOR’S APPLICATION:
A. Application Cover Page. See attached Form A sample page 72.
B. Supplemental Information Page. See Form B sample page 73 or NASAA’s form Franchisor
Costs and Source of Funds
C. Verification/Certification: An authorized officer, manager or general partner should sign the
application. See Form C on attached sample pages 74 and 75. A person holding a power
of attorney may sign if the authorizing corporate resolution is included.
D. Either (1) Sales Agent Disclosure Form. See Form E on attached page 78. Send a clean
copy (marked CONFIDENTIAL) and one that redacts (blacks out) home address and
telephone number, SSN and birth date or (2) NASAA’s Franchise Seller Form. Individuals
listed in Item 2 do not have to submit either form.
E. NOTE: Complete a form only for each person offering and selling the franchise in
California, Do not submit forms for individuals who may sell in California. When a franchise
seller has a prospect in California file a post-effective amendment and submit a franchise
seller form for the individual at that time.
F. One copy of the Disclosure Document in the Uniform Franchise Disclosure Document
(UFDD) format in this packet (UFDD as adopted by NASAA on June 22, 2007). Note the
Mandatory Disclosure Requirements outlined in California Code of Regulations, title 10,
section 310.114.1 that make some changes to the format. (California State Addendum)
G. Consent to Service of Process (not required for California entities: California corporations,
California limited partnerships, or California limited liability companies).
H. Acknowledgement: An authorized officer, manager or general partner should sign the
acknowledgment in their authorized capacity. This form is required for the Consent to
Service of Process.
I. Customer Authorization Form [QR 500.265, see also Corporations Code section 31111(b)]
J. Internet Ad Exemption Notice. This notice is required annually. See Rule 310.156.3 of title
10, California code of regulations.
K. Auditor’s Consent
L. Audited (or, if eligible, Reviewed) financial statements.
M. Send only one set of all Forms A-L.
5.
REQUIRED FINANCIAL STATEMENTS FOR REGISTRATION:
Normally, the application must include the franchisor’s financial statements audited by an
independent certified public accountant (CPA) in accordance with generally accepted
accounting principles (GAAP) (See Cal. Code Regs, tit. 10, section 310.111.2 for
requirements). With the application, a franchisor must include a manually signed consent of
STATE OF CALIFORNIA –
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 8 of 84
the independent public accountant for the use of the audited financial statements in the UFDD.
The Department will not accept “Compilation” report financial statements unless they are
interim financials, submitted with “Audited” report financials.
Note that the use of audited financial statements does not relieve the applicant, or any person,
from liability for false and misleading statements contained in the financial statements.
The Department may accept a current “Review” report balance sheet instead of an audit if:
A. It is the franchisor’s first registration application in California and the franchisor has no prior
audited financial statements;
B. The “Review” report balance sheet is dated within 90 days of the application filing date;
C. The financials include profit and loss statements covering the prior three years, or from
inception of the business; a Statement of Cash Flow; and appropriate footnotes.
D. The “Review” report conforms to the standards promulgated by the American Institute of
Certified Public Accountants.
Note: California did not adopt the FTC’s “phase-in” option for unaudited financial statements.
6.
FINANCIAL ASSURANCES:
1. Impound: The franchisor must demonstrate its present financial ability to meet its
obligations to the franchisee stated in the UFDD and Franchise Agreement without relying
on the proposed franchisee’s funds. Otherwise, the Commissioner will impound all initial
fees paid by the franchisee to the franchisor. If an impound is required, you must submit a
copy of the form of Purchase receipt, and the written consent of the Depositary. (See Cal.
Code Regs., tit. 10, § 310.113 through 310.113.2).
2. Increase in capital: The franchisor may avoid an impound if an increase in the
franchisor’s capitalization demonstrates its financial ability to meet the proposed
obligations.
3. Surety Bond: The franchisor may avoid an impound by posting a surety bond as per
Cal. Code Regs., tit. 10, § 310.113.5. See attached form.
4. Guarantee of Performance: An impound may also be avoided by providing an
adequate Guarantee of Performance, along with the Guarantor’s audited
financial
statements
which must be included along with the Guarantee in the UFDD. These
financials must show the Guarantor’s financial ability to meet the franchisor’s obligations.
See Form F on page 79, attached.
5. Fee Deferral: The franchisor may avoid an impound by postponing payment of the
initial franchise fee, provided that the franchisor has completed its initial obligations (as
disclosed in Item 11) and the franchisee is open for business. A fee deferral is required to
be disclosed in the UFDD.
STATE OF CALIFORNIA –
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 9 of 84
7.
PRE-EFFECTIVE AMENDMENT:
A Pre-effective amendment changes a pending application. The application must include a
facing page and a verification page. Underline or mark documents to show changes from the
previous filing. Send only the marked copy. Do not send an unmarked copy. Do not highlight
changes in color. There is no fee to file a pre-effective amendment, unless a balance fee is
owed on the previous filing.
A pre-effective amendment may also be filed within 6 months of an abandonment of the
application only if all the outstanding comments at the time of the abandonment are
addressed. Additionally, the applicant must file a facing page marked as a pre-effective
amendment/RE- INSTATEMENT, with a certification page. The cover letter must specifically
mention that the applicant is seeking the reinstatement of an application that was abandoned
on a specified date.
8.
POST-EFFECTIVE AMENDMENT:
A Post-effective amendment is submitted after a registration is effective. A Post-effective
amendment application includes a completed application cover page, and a verification page.
Mark the documents to reflect any changes from the prior filing. Send only this one marked
copy of the document, which clearly indicates the changes made. Do not send an unmarked
copy and do not send documents that have not been changed. There is a $50 fee for filing a
post-effective amendment application.
After the franchisor is registered, it must file an application for post- effective amendment when
a material change occurs or to add sales agents. A post-effective amendment application is
effective as of the date an order is issued indicating the effectiveness of the post-effective
amendment.
9.
RENEWAL:
A renewal application must be submitted in the same format as the original application.
Include all documents required for an initial registration. In the cover letter of the application,
please acknowledge whether any documents or exhibits will be submitted at a later time, and
state the fiscal year.
The franchisor’s financial statements for the most recent fiscal year must be certified as
audited by an independent CPA. Submit a manually executed auditor’s consent for use of the
financial statements in the UFDD.
Send one complete, updated, clean copy of the UFDD and exhibits. If a document is revised,
send only one copy of the changed pages, with the changes clearly marked, but not
highlighted in color. Do NOT send extra copies.
As of January 1, 2015, California Corporations Code sections 31116 and 31121 have been
amended. The amendment changes the automatic effective date to the 30th business day
after the filing of a complete application for registration or the last pre-effective amendment. A
complete application means an application that contains the appropriate filing fee, UFDD and
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 10 of 84
all additional exhibits including financial statements in conformity with regulations of the
commissioner.
A renewal application must be filed before the expiration date of the registration. So long as a
renewal filing of a complete application is received by the Department before the current
registration expires, the renewal filing fee is $450. Checks should be made payable to the
Department of Financial Protection and Innovation. If the renewal is received after the
current registration expires, it will be treated as an initial filing for filing fee purposes. The
initial filing fee is $675.
The franchisor may not offer or sell franchises in California in the interim period between
expiration and renewal, except that the franchisor may make an offer (but not a sale) of a
franchise in the manner provided by Corporations Code section 31107.
PLEASE KEEP IN MIND ANY STATE HOLIDAYS THAT MAY AFFECT THE FILING DATE.
Incomplete applications cannot go automatically effective. If you acknowledge that your
application package is incomplete in any way, or the Department sends written comments to
the franchisor before any automatic effectiveness, the application is deemed incomplete and
will not go automatically effective upon the expiration of the previous registration. When all
issues raised in the Department’s comments have been resolved, the application will then be
considered complete. The registration of the offer of the franchises will become automatically
effective at 12:00 pm, California time, of the 30
th
business day after filing the complete
application.
10.
MATERIAL MODIFICATION OF EXISTING FRANCHISEES:
If the franchisor proposes to change any terms of an existing franchise agreement for a
California franchise then an application must be sent into the Department under Corporations
Code section 31125 before the change is made unless an exception applies. See Cal. Code
Regs., tit. 10, § 310.125.
Corporations Code sections 31125(c) and (d) excepts modifications of the existing
franchise(s) if all of the following conditions are met:
1. The franchise owner must receive the complete written modification at least five
business days prior to the execution of a binding agreement, or provide that the franchise
owner may, by written notice mailed or delivered to the franchisor or a specified agent of
the franchisor within not less than five business days following the execution of the
agreement, rescind the agreement to the material modification;
2. The modification agreement must not be signed within twelve months after the date
of the franchise agreement;
3. The modification must not waive any right of the franchise owner under the
California Franchise Relations Act, but the modification may include a general release of
all known and unknown claims by a party to the modification; and
4. (i) The proposed modification must be in connection with the resolution of a bona
fide dispute between the franchisor and the franchise owner, and the modification must not
be applied on a franchise system wide basis (meaning offered on a voluntary basis to
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOV
ATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 11 of 84
fewer than twenty-five percent of the franchisor's California franchises within any twelve
month period); OR (ii) The proposed modification must be offered on a voluntary basis to
fewer than twenty-five percent of the franchisor's California franchises within any twelve
month period, provided each franchise owner must be given a right to rescind the
modification agreement if the modification is not made in compliance with paragraph (i); or
5. The modification must be offered on a voluntary basis and must not substantially or
adversely impact the franchise owner's rights, benefits, privileges, duties, obligations, or
responsibilities under the franchise agreement.
11. NEGOTIATED SALES
Under the California Franchise Investment Law, a franchisor is prohibited from offering to
prospective franchise owners any franchise terms different from the terms of the offer
registered under Corporations Code sections 31111 (initial registration), 31121 (renewal) or
31123 (post-effective Amendment). So this prohibition does not apply to offers and sales of
franchises made under an exemption.
Note that Negotiated Sales are different than Material Modifications as Material Modifications
are made to existing franchise agreements. If the franchisor proposes to change any terms of
an existing franchise agreement to a California franchise then an application must be filed with
the Department under Corporations Code section 31125 before the change is made unless an
exception applies.
There are 3 options for addressing negotiates sales in California.
1. Corporations Code section 31109.1 and California Code of Regulations, title 10,
section 310.100.4
1
require the franchisor to take the following actions:
a. The initial offer must be registered under Corporations Code section 31111, 31121, or
31123;
b. In an appendix to the FDD, the franchisor must provide a prospective franchise owner
with a summary description of all of the material negotiated terms during the prior 12
month period in the form prescribed under California Code of Regulations, title 10,
section 310.100.4, along with a statement that copies of the negotiated terms are
available upon written request and the contact information of the franchisor's
representative from whom negotiated terms can be obtained;
c. The franchisor must certify or declare in an appendix to its application for renewal that
it has complied with all of the requirements under Corporations Code section 31109.1
(in the event this exemption is claimed);
d. The negotiated terms, on the whole, must confer additional benefits on the prospective
franchise owner;
e. The franchisor must provide a copy of all negotiated terms to the prospective franchise
owner within five business days following the request of the prospective franchise
owner; and
1
The rules referred to herein are in the California Code of Regulations (CCR), title 10.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR
FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 12 of 84
f. The franchisor must keep copies of all material negotiated terms for a period of five
years from the date of the first agreement containing the relevant negotiated term.
Upon the request of the commissioner, the franchisor must make the copies available
to the commissioner for review.
2. California Code of Regulations, title 10, section 310.100.2 exempts the offer or sale of
a franchise on terms different from the terms of the offer registered if all of the following
conditions are met:
a. The initial offer must be registered under Corporations Code section 31111, 31121, or
31123;
b. When the prospective franchise owner receives the FDD, he or she must also receive
copies of all Notices of Negotiated Sale of Franchise filed with the state within the last
12 months, if any;
c. Before selling another franchise, the franchisor must amend its registered offer with
prescribed language indicating that items have been negotiated with other franchise
owners and copies of filed notices of negotiated sales are attached to the document
(which can also be done by amendment that is automatically effective upon filing);
d. A Notice of Negotiated Sale of Franchise in prescribed form must be filed with the state
within fifteen business days after the negotiated sale is consummated; and
e. The franchisor certifies or declares in an appendix to its application for renewal that all
notices have been filed with the state as required under California Code of Regulations,
title 10, section 310.100.2.
3. Corporations Code section 31123 requires a franchisor to promptly notify the
commissioner in writing, by an application to amend the registration, of any material
change in the information contained in the application as originally submitted, amended
or renewed. The negotiated changes under this option must be sent to the Department
as a post-effective amendment. The prospective franchisee is re-disclosed after the
Department issues an order and the sale is not consummated until after the 14-day
waiting period.
12.
FILING AN ELECTRONIC COPY OF YOUR APPLICATION:
An applicant may file the entire application through DOCQNET, the Department’s Self-Service
Portal. All of the documents submitted should be converted to ".pdf" files. The submission of
an electronic filing is subject to all of the same requirements as submitting a hardcopy filing.
Filing your application will expedite the processing of the file into the Department’s electronic
database. The cover letter from the attorney or officer of the Company submitting the file
should contain a representation that all of the information contained in the electronic file is
complete.
13. INCOMPLETE APPLICATIONS:
As of January 1, 2015, California Corporations Code sections 31116 and 31121 have been
amended. The amendment changes the automatic effective date to the 30th business day
after the filing of a complete application for registration or the last pre-effective amendment.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
D
FPI-310.111 (Rev. 10-20) Page 13 of 84
A complete application means an application that contains the appropriate filing fee, UFDD
and all additional exhibits including financial statements in conformity with regulations of the
commissioner.
Applications that are incomplete are not eligible for automatic effectiveness.
14.
ADVERTISING:
Any franchise subject to the registration requirements of this law must file a true copy of the
advertisement with the commissioner and the franchisor shall not publish the advertisement
until the advertisement has been filed in the office of the commissioner at least 3 business
days.
See Corporations Code section 31156, and California Code of Regulations, title 10, sections
310.156 through 310.156.2, regarding the filing of the advertising.
If the franchisor advertises the offer and sale of a franchise on a website on the Internet, the
franchisor must comply with California Code of Regulations, title 10, section 310.156.3
regarding Internet advertisements.
15.
COPIES OF CALIFORNIA FRANCHISE LAW AND
RULES:
The Franchise Investment Law can be found in Corporations Code sections 31000 to 31516.
The rules are in the California Code of Regulations, title 10, Chapter 3, sections 310.000
through 310.505.
To view or obtain copies of the Corporations Code or the Rules contact:
a. West Publishing Company: “Corporations Code Compact Edition” for both the law and
rules. 1-800-328-9352
b. LexisNexis www.LexisNexis.com or 1-800-223-1940
c. Department’s website www.dfpi.ca.gov
d. Legislative Counsel’s website (for code sections only): www.leginfo.ca.gov/calaw.html
16. RELIANCE ON THESE INSTRUCTIONS:
Applicants should review the current Franchise Investment Law and the Commissioner’s
Rules. These instructions paraphrase the statutes and rules. The franchisor should rely on the
published statute and rules.
17.
FORMS, RECORDS AND COPYWORK:
For the Department’s forms, official records of franchise applicants in California or copy work,
call the Department’s toll free number 1-866- 275-2677 or visit the Department’s website at
www.dfpi.ca.gov see Resources (Information Regarding Franchises) for forms see Online
Resources [Access to Securities & Franchise Filings (“DocQNet”)] for all franchise filings since
late 2002. For access to the North American Securities Administrators Association’s
“INSTRUCTIONS FOR FILING A UNIFORM FRANCHISE REGISTRATION APPLICATION
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE
REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 14 of 84
USING THE “NEW FTC FRANCHISE RULE” AFTER JULY 1, 2007” (“NASAA”), including the
Application Page (page 71) and Forms B through Form F (pages 72 – 79), go to the NASAA
website www.nasaa.org, click on INDUSTRY & REGULATORY RESOURCES, Uniform
Forms. Highlight an area, click on Format, Font and choose a Size to enlarge.
18. ADDITIONAL INFORMATION: For additional information regarding franchising in California,
review the Department’s website at www.dfpi.ca.gov.
SUMMARY OF CALIFORNIA FRANCHISE EXEMPTIONS:
CALIFORNIA
Type of Exemption
Cite
(CA Corp
Code)
Disclosure
Required
Exempt
from
Disclosure
Notice
Filing
Self-
Executing
Discretionary
1
Fractional Franchise
§ 31108
✓
✓
Insiders
§ 31106
✓
✓
Institutional Franchisee
Large Franchisee
2
§ 31109
✓
✓
Large Franchisor
§ 31101
✓
✓
Large Investment
Nominal Fee
3
Rule 310.011
✓
✓
Out of State Sales
4
§ 31105
Renewal of Existing
Agreement
5
§ 31018
Sale of Single
Franchise
Sales by Existing
Franchisees
6
§ 31102
Sales to Existing
Franchisees
§ 31106
1: See Commissioner's Release 61-C: How to request an Interpretive Opinion
2: Corporations Code section 31109(e) The notice must be filed before the offer is made
3: Nominal fee cannot exceed $500 annually
4: No CA residents purchasing and all business located outside of CA
5: Exempt only if there is no interruption in the operation of the business and no material
modification of the existing franchise.
6: Sale cannot be effected by or through franchisor but franchisor may approve new
franchisee
CAVEAT: §31153 places burden of proving an exemption the person claiming it
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 15 of 84
INSTRUCTIONS
FOR
FIL
IN
G
A UNIFORM FRANCHISE
REGISTRATION
AP
PLICATION
USING THE “NEW FTC
FRANCHISE
RULE”
AFTER JULY 1, 2007
I.
Bac
kgr
ound
On January 23, 2007, after a twelve year regulatory review, the Federal Trade Commission
(“FTC”) announced that it had adopted a final amended Franchise Rule, with a Statement of
Basis and Purpose and Regulatory Analysis (the “2007 Franchise Rule”)
2
The 2007 Franchise
Rule represents the first time the FTC has amended its Franchise Rule (the “Original Franchise
Rule”) since 1978, when it was originally promulgated.
3
Among other things, the 2007 Franchise Rule adopts new requirements for franchisors
preparing franchise disclosure documents, also called “offering circulars.” Since December 30,
1993, the FTC has allowed franchisors to prepare and distribute disclosure documents under one
of two disclosure formats: (1) the FTC’s Original Franchise Rule; or (2) the Uniform Franchise
Offering Circular (“UFOC”) Guidelines, adopted on April 23, 1993 by the North American
Administrators Association, Inc. (“NASAA”).
4
After NASAA adopted the UFOC Guidelines, fifteen states (“Registration States”) required
franchisors to follow that disclosure format to comply with state franchise laws. As a practical
matter, most franchisors have chosen to prepare their disclosure documents under the UFOC
Guidelines, even in states where that format is not specifically required.
The FTC’s 2007 Franchise Rule adopts disclosure requirements that closely track the
UFOC Guidelines.
5
In some instances, however, the 2007 Franchise Rule omits or streamlines
UFOC Guideline disclosure requirements, such as broker disclosures, cover page risk factors,
and detailed computer requirements. In addition, the 2007 Franchise Rule incorporates new
disclosure requirements not found in the UFOC Guidelines, including disclosures related to a
franchisor’s parent, franchisor initiated litigation, confidentiality clauses and the existence of
trademark-specific franchisee associations. The 2007 Franchise Rule also substantially revised
the UFOC Guideline disclosure of statistical information on franchisees and outlets (Item 20),
adopting the approach suggested by NASAA in its comment to the FTC’s Notice of Proposed
Rulemaking.
6
5
In light of the similarities between the 2007 Franchise Rule and the UFOC Guidelines,
and the FTC’s lengthy and comprehensive regulatory review that preceded its adoption of the
2007 Franchise Rule, NASAA intends at this time to adopt the disclosure requirements under the
2007 Franchise Rule as a successor to the UFOC Guidelines, with minimal additional
requirements, the most significant being a state risk factor cover page.
2
16 CFR 436, as amended, 72 FR 15444 (Mar. 30, 2007)
3
43 FR 59614 (Dec. 21, 1978)
4
16 CRF 436.1 (a)-(e), 58 FR 69224 (Dec. 30, 2007)
5
2007 Franchise Rule, 72 FR 15448
6
2007 Franchise Rule, 72 FR at 15502
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 16 of 84
The FTC’s 2007 Franchise Rule allows franchisors to choose to follow the new disclosure
format on July 1, 2007, and some franchisors may seek to utilize that disclosure format in the
Registration States as soon as possible. Consequently, until NASAA adopts a replacement for
the UFOC Guidelines, NASAA recommends that, as of July 1, 2007, Registration States permit
franchisors to file in those states franchise disclosure documents prepared under the 2007
Franchise Rule, in accordance with the Instructions set forth below. Franchisors may continue to
file and use in the Registration States franchise disclosure documents prepared under the UFOC
Guidelines until July 1, 2008.
II. Uniform
Franchise Registration
Application
In order to register a franchise in the Registration States, franchisors must continue to
follow the Instructions provided under the UFDD Guidelines for filing franchise registration
applications, and must continue to file the following application documents, other than the
disclosure document, in the format required under the UFDD Guidelines:
A. Uniform Franchise Registration Application Page;
B. Supplemental Information page(s);
C. Certification page
D. Uniform Consent to Service of Process;
E. Sales Agent Disclosure Form/ Franchise Seller Form
F. If the applicant is a corporation or partnership or limited liability company, an
authorizing resolution if the application is verified by a person other than applicant's
officer or general partner;
G. Uniform Franchise Disclosure Document (see Part III below);
H. Application Fee;
I. Auditor's consent (or a photocopy of the consent) to the use of the latest audited
financial statements in the offering circular; and
J. Advertising or promotional materials, if required.
III. The Uniform
Franchise
Disclosure Doc
ument
A. Format.
The Uniform Franchise Disclosure Document shall be prepared in the format required
under the 2007 Franchise Rule, 16 CFR 436.3 -.5, as amended, (Subparts C and D), with the
additions listed at Section III B and C below. A copy of the contents and instructions for
preparing a Uniform Franchise Disclosure Document under the 2007 Franchise Rule, along with
accompanying definitions applicable for preparing that form of disclosure document, is attached
to these Instructions at Exhibit 1.
B. State Cover Page.
The Uniform Franchise Disclosure Document shall include the following State Cover Page
prepared in accordance with these Instructions and shall immediately follow the Cover Page
described at 16 CFR 436.3 of the 2007 Franchise Rule:
1. State the following legend:
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 17 of 84
STATE COVER
P
AG
E
Your state may have a franchise law that requires a franchisor to register or file with a state
franchise administrator before offering or selling in your state. REGISTRATION OF A
FRANCHISE BY A STATE DOES NOT MEAN THAT THE STATE RECOMMENDS THE
FRANCHISE OR HAS VERIFIED THE INFORMATION IN THIS DISCLOSURE DOCUMENT.
Call the state franchise administrator listed in Exhibit for information about the
franchisor, or about franchising in your state.
2. State the following:
MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW UNCONDITIONALLY
AFTER THE INITIAL TERM EXPIRES. YOU MAY HAVE TO SIGN A NEW AGREEMENT WITH
DIFFERENT TERMS AND CONDITIONS IN ORDER TO CONTINUE TO OPERATE YOUR
BUSINESS. BEFORE YOU BUY, CONSIDER WHAT RIGHTS YOU HAVE TO RENEW YOUR
FRANCHISE, IF ANY, AND WHAT TERMS YOU MIGHT HAVE TO ACCEPT IN ORDER TO
RENEW.
3. If any of the following apply, state the following, using capital letters as shown:
Please consider the following RISK FACTORS before you buy this franchise:
THE FRANCHISE AGREEMENT REQUIRES YOU TO RESOLVE DISPUTES WITH US
BY [LITIGATION/ARBITRATION/MEDIATION] ONLY IN [STATE]. OUT-OF-STATE
[LITIGATION/ARBITRATION/MEDIATION] MAY FORCE YOU TO ACCEPT A LESS
FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO
[SUE/ARBITRATE/MEDIATE] WITH US IN [STATE] THAN IN YOUR OWN STATE.
THE FRANCHISE AGREEMENT STATES THAT [STATE] LAW GOVERNS THE
AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND
BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS.
4. In addition to the above, disclose other risk factors required by a state
administrator.
5. If one or more risk factor applies, also state:
THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
6. If applicable, state the following:
We use the services of one or more FRANCHISE BROKERS or referral sources to assist
us in selling our franchise. A franchise broker or referral source represents us, not you. We pay
this person a fee for selling our franchise or referring you to us. You should be sure to do your
own investigation of the franchise.
STATE OF CALIFORNIA –
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 18 of 84
7. (a) State the following:
Effective Date:
(b) Leave the effective date blank until notified of effectiveness by the state
administrator.
(c) If an applicant is using a multi-state disclosure document, the applicant may list
multiple state effective dates together on a separate page following the
Supplement State Cover page.
A sample State Cover Page is attached following these Instructions at Exhibit 2.
C. Receipt.
If applicable state law requires a franchisor to provide the disclosure document earlier
than the 14 days provided in the 2007 Franchise Rule, the franchisor shall add a statement to
the receipt page to the uniform franchise disclosure document to accurately reflect state law
requirements to deliver the disclosure document.
STATE OF CALIFORNIA –
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 19 of 84
Exhibit 1: Uniform
Franchise
Disclosure Doc
ument
De
finit
ion
s:
Unless stated otherwise, the following definitions apply throughout these Instructions to the
extent they do not conflict with applicable state law.
(a) Action includes complaints, cross claims, counterclaims, and third-party complaints
in a judicial action or proceeding, and their equivalents in an administrative action or arbitration.
(b) Affiliate means an entity controlled by, controlling, or under common control with,
another entity.
(c) Confidentiality clause means any contract, order, or settlement provision that
directly or indirectly restricts a current or former franchisee from discussing his or her personal
experience as a franchisee in the franchisor’s system with any prospective franchisee. It does
not include clauses that protect franchisor’s trademarks or other proprietary information.
(d) Disclose, state, describe, and list each mean to present all material facts
accurately, clearly, concisely, and legibly in plain English.
(e) Financial performance representation means any representation, including any
oral, written, or visual representation, to a prospective franchisee, including a representation in
the general media, that states, expressly or by implication, a specific level or range of actual or
potential sales, income, gross profits, or net profits. The term includes a chart, table, or
mathematical calculation that shows possible results based on a combination of variables.
(f) Fiscal year refers to the franchisor’s fiscal year.
(g) Franchisee means any person who is granted a franchise.
(h) Franchise seller means a person that offers for sale, sells, or arranges for the sale
of a franchise. It includes the franchisor and the franchisor’s employees, representatives,
agents, sub franchisors, and third-party brokers who are involved in franchise sales activities. It
does not include existing franchisees who sell only their own outlet and who are otherwise not
engaged in franchise sales on behalf of the franchisor.
(i) Franchisor means any person who grants a franchise and participates in the
franchise relationship. Unless otherwise stated, it includes sub franchisors. For purposes of this
definition, a “sub franchisor” means a person who functions as a franchisor by engaging in both
pre-sale activities and post-sale performance.
(j) Parent means an entity that controls another entity directly, or indirectly through
one or more subsidiaries.
(k) Person means any individual, group, association, limited or general partnership,
corporation, or any other entity.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 20 of 84
(l) Plain English means the organization of information and language usage
understandable by a person unfamiliar with the franchise business. It incorporates short
sentences; definite, concrete, everyday language; active voice; and tabular presentation of
information, where possible. It avoids legal jargon, highly technical business terms, and multiple
negatives.
(m) Predecessor means a person from whom the franchisor acquired, directly or
indirectly, the major portion of the franchisor’s assets.
(n) Principal business address means the street address of a person’s home office in
the United States. A principal business address cannot be a post office box or private mail drop.
(o) Prospective franchisee means any person (including any agent, representative, or
employee) who approaches or is approached by a franchise seller to discuss the possible
establishment of a franchise relationship.
(p) Required payment means all consideration that the franchisee must pay to the
franchisor or an affiliate, either by contract or by practical necessity, as a condition of obtaining or
commencing operation of the franchise. A required payment does not include payments for the
purchase of reasonable amounts of inventory at bona fide wholesale prices for resale or lease.
(q) Trademark includes trademarks, service marks, names, logos, and other
commercial symbols.
Contents of the Uniform
Franchise
Disclosure Doc
um
e
nt
Part 1: Cover
page.
Begin the disclosure document with a cover page, in the order and form as follows:
(a) The title “FRANCHISE DISCLOSURE DOCUMENT” in capital letters and bold
type.
(b) The franchisor’s name, type of business organization, principal business address,
telephone number, and, if applicable, email address and primary home page address.
(c) A sample of the primary business trademark that the franchisee will use in its
business.
(d) A brief description of the franchised business. (e) The following statements:
(1) The total investment necessary to begin operation of a [franchise system name]
franchise is [the total amount of Item 7]. This includes [the total amount in Item 5]
that must be paid to the franchisor or affiliate.
STATE OF CALIFORNIA –
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 21 of 84
(2) This disclosure document summarizes certain provisions of your franchise
agreement and other information in plain English. Read this disclosure document
and all accompanying agreements carefully. You must receive this disclosure
document at least 14 calendar-days before you sign a binding agreement with, or
make any payment to, the franchisor or an affiliate in connection with the proposed
franchise sale. [The following sentence in bold type] Note, however, that no
governmental agency has verified the information contained in this document.
(3) The terms of your contract will govern your franchise relationship. Don’t rely on the
disclosure document alone to understand your contract. Read all of your contract
carefully. Show your contract and this disclosure document to an advisor, like a
lawyer or an accountant.
(4) Buying a franchise is a complex investment. The information in this disclosure
document can help you make up your mind. More information on franchising, such
as “A Consumer’s Guide to Buying a Franchise,” which can help you understand
how to use this disclosure document, is available from the Federal Trade
Commission. You can contact the FTC at 1-877-FTC-HELP or by writing to the
FTC at 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. You can also
visit the FTC’s home page at www.ftc.gov for additional information. Call your state
agency or visit your public library for other sources of information on franchising.
(5) There may also be laws on franchising in your state. Ask your state agencies
about them.
(6) [The issuance date].
(f) A franchisor may include the following statement between the statements set out at
paragraphs (2) and (3) of this Part: “You may wish to receive your disclosure document in
another format that is more convenient for you. To discuss the availability of disclosures in
different formats, contact [name or office] at [address] and [telephone number].”
(g) Franchisors may include additional disclosures on the cover page, on a separate
cover page, or addendum to comply with state pre-sale disclosure laws.
STATE OF CALIFORNIA –
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 22 of 84
Part 2: Table of c
ont
e
nt
s.
Include the following table of contents. State the page where each disclosure Item
begins. List all exhibits by letter, as shown in the following example.
Table of
Contents
1. The Franchisor and any Parents, Predecessors, and Affiliates
2. Business Experience
3. Litigation
4. Bankruptcy
5. Initial Fees
6. Other Fees
7. Estimated Initial Investment
8. Restrictions on Sources of Products and Services
9. Franchisee’s Obligations
10. Financing
11. Franchisor’s Assistance, Advertising, Computer Systems, and Training
12. Territory
13. Trademarks
14. Patents, Copyrights, and Proprietary Information
15. Obligation to Participate in the Actual Operation of the Franchise Business
16. Restrictions on What the Franchisee May Sell
17. Renewal, Termination, Transfer, and Dispute Resolution
18. Public Figures
19. Financial Performance Representations
20. Outlets and Franchisee Information
21. Financial Statements
22. Contracts
23. Receipts
Exhi
bits
A. Franchise Agreement
Part 3: The
Franchise
Disclosure Doc
um
e
nt
Item 1: The Franchisor, and any Parents, Predecessors, and Affiliates.
Disclose:
(1) The name and principal business address of the franchisor; any parents; and any
affiliates that offer franchises in any line of business or provide products or services to the
franchisees of the franchisor.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 23 of 84
(2) The name and principal business address of any predecessors during the 10-year
period immediately before the close of the franchisor’s most recent fiscal year.
(3) The name that the franchisor uses and any names it intends to use to conduct
business.
(4) The identity and principal business address of the franchisor’s agent for service of
process.
(5) The type of business organization used by the franchisor (for example, corporation,
partnership) and the state in which it was organized.
(6) The following information about the franchisor’s business and the franchises
offered:
(i) Whether the franchisor operates businesses of the type being franchised.
(ii) The franchisor’s other business activities.
(iii) The business the franchisee will conduct.
(iv) The general market for the product or service the franchisee will offer. In
describing the general market, consider factors such as whether the market is developed or
developing, whether the goods will be sold primarily to a certain group, and whether sales are
seasonal.
(v) In general terms, any laws or regulations specific to the industry in which the
franchise business operates.
(vi) A general description of the competition.
(7) The prior business experience of the franchisor; any predecessors listed in Item
1(a)(2) of this part; and any affiliates that offer franchises in any line of business or
provide products or services to the franchisees of the franchisor, including:
(i) The length of time each has conducted the type of business the franchisee will
operate.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 08-20) Page 24 of 84
(ii) The length of time each has offered franchises providing the type of business the
franchisee will operate.
(iii) Whether each has offered franchises in other lines of business. If so, include:
(A) A description of each other line of business.
(B) The number of franchises sold in each other line of business.
(C) The length of time each has offered franchises in each other line of business.
Item 2: Business Experience.
Disclose by name and position the franchisor’s directors, trustees, general partners,
principal officers, and any other individuals who will have management responsibility relating to
the sale or operation of franchises offered by this document. For each person listed in this
section, state his or her principal positions and employers during the past five years, including
each position’s starting date, ending date, and location.
Item 3: Litigation.
franchise sales by promising to back the franchisor financially or otherwise guarantees the
franchisor’s performance; an affiliate who offers franchises under the franchisor’s principal
trademark; and any person identified in Item 2 of this part:
(i) Has pending against that person:
(A) An administrative, criminal, or material civil action alleging a violation of a
franchise, antitrust, or securities law, or alleging fraud, unfair or deceptive practices, or
comparable allegations.
(B) Civil actions, other than ordinary routine litigation incidental to the business, which
are material in the context of the number of franchisees and the size, nature, or financial
condition of the franchise system or its business operations.
STATE OF CALIFORNIA –
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 25 of 84
(ii) Was a party to any material civil action involving the franchise relationship in the
last fiscal year. For purposes of this section, “franchise relationship” means contractual
obligations between the franchisor and franchisee directly relating to the operation of the
franchised business (such as royalty payment and training obligations). It does not include
actions involving suppliers or other third parties, or indemnification for tort liability.
(iii) Has in the 10-year period immediately before the disclosure document’s issuance
date:
(A) Been convicted of or pleaded nolo contendere to a felony charge.
(B) Been held liable in a civil action involving an alleged violation of a franchise,
antitrust, or securities law, or involving allegations of fraud, unfair or deceptive practices, or
comparable allegations. “Held liable” means that, as a result of claims or counterclaims, the
person must pay money or other consideration, must reduce an indebtedness by the amount of
an award, cannot enforce its rights, or must take action adverse to its interests.
guarantees the franchisor’s performance; an affiliate who has offered or sold franchises in any
line of business within the last 10 years; or any other person identified in Item 2 of this part is
subject to a currently effective injunctive or restrictive order or decree resulting from a pending or
concluded action brought by a public agency and relating to the franchise or to a Federal, State,
or Canadian franchise, securities, antitrust, trade regulation, or trade practice law.
(3) For each action identified in paragraphs (1) and (2) of this Item 3, state the title,
case number or citation, the initial filing date, the names of the parties, the forum, and the
relationship of the opposing party to the franchisor (for example, competitor, supplier, lessor,
franchisee, former franchisee, or class of franchisees). Except as provided in paragraph (4) of
this Item 3, summarize the legal and factual nature of each claim in the action, the relief sought
or obtained, and any conclusions of law or fact.
7
In addition, state:
7
Franchisors may include a summary opinion of counsel concerning any action if counsel
consent to use the summary opinion and the full opinion is attached to the disclosure document.
STATE OF CALIFORNIA –
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 26 of 84
(i) For pending actions, the status of the action.
(ii) For prior actions, the date when the judgment was entered and any damages or
settlement terms.
8
(iii) For injunctive or restrictive orders, the nature, terms, and conditions of the order or
decree.
(iv) For convictions or pleas, the crime or violation, the date of conviction, and the
sentence or penalty imposed.
(4) For any other franchisor-initiated suit identified in paragraph (1)(ii) of this Item 3,
the franchisor may comply with the requirements of paragraphs (3)(i)-(iv) of this Item 3 by listing
individual suits under one common heading that will serve as the case summary (for example,
“royalty collection suits”).
Item 4: Bankruptcy.
(1) Disclose whether the franchisor; any parent; predecessor; affiliate; officer, or
general partner of the franchisor, or any other individual who will have management responsibility
relating to the sale or operation of franchises offered by this document, has, during the 10-year
period immediately before the date of this disclosure document:
(i) Filed as debtor (or had filed against it) a petition under the United States
Bankruptcy Code (“Bankruptcy Code”).
(ii) Obtained a discharge of its debts under the Bankruptcy Code.
(iii) Been a principal officer of a company or a general partner in a partnership that
either filed as a debtor (or had filed against it) a petition under the Bankruptcy Code, or that
8
If a settlement agreement must be disclosed in this Item, all material settlement terms
must be disclosed, whether or not the agreement is confidential. However, franchisors need not
disclose the terms of confidential settlements entered into before commencing franchise sales.
Further, any franchisor who has historically used only the Franchise Rule format, or who is new to
franchising, need not disclose confidential settlements entered prior to the effective date of this
Rule.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 27 of 84
obtained a discharge of its debts under the Bankruptcy Code while, or within one year after, the
officer or general partner held the position in the company.
(2) For each bankruptcy, state:
(i) The current name, address, and principal place of business of the debtor.
(ii) Whether the debtor is the franchisor. If not, state the relationship of the debtor to
the franchisor (for example, affiliate, officer).
(iii) The date of the original filing and the material facts, including the bankruptcy court,
and the case name and number. If applicable, state the debtor’s discharge date, including
discharges under Chapter 7 and confirmation of any plans of reorganization under Chapters 11
and 13 of the Bankruptcy Code.
relating to bankruptcy.
Item 5: Initial Fees
Disclose the initial fees and any conditions under which these fees are refundable. If the
initial fees are not uniform, disclose the range or formula used to calculate the initial fees paid in
the fiscal year before the issuance date and the factors that determined the amount. For this
section, “initial fees” means all fees and payments, or commitments to pay, for services or goods
received from the franchisor or any affiliate before the franchisee’s business opens, whether
payable in lump sum or installments. Disclose installment payment terms in this section or in
Item 10 of this part.
Item 6: Other Fees.
Disclose, in the following tabular form, all other fees that the franchisee must pay to the
franchisor or its affiliates, or that the franchisor or its affiliates impose or collect in whole or in
part for a third party. State the title “OTHER FEES” in capital letters using bold type. Include
any formula used to compute the fees.
STATE OF CALIFORNIA –
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 28 of 84
Item 6 Table
OTHER
F
EES
Type of fee
Amount
Due Date
Remarks
(1) In column (1), list the type of fee (for example, royalties, and fees for lease
negotiations, construction, remodeling, additional training or assistance, advertising, advertising
cooperatives, purchasing cooperatives, audits, accounting, inventory, transfers, and renewals).
(2) In column (2), state the amount of the fee.
(3) In column (3), state the due date for each fee.
(4) In column (4), include remarks, definitions, or caveats that elaborate on the
information in the table. If remarks are long, franchisors may use footnotes instead of the
remarks column. If applicable, include the following information in the remarks column or in a
footnote:
(i) Whether the fees are payable only to the franchisor
(ii) Whether the fees are imposed and collected by the franchisor.
(iii) Whether the fees are non-refundable or describe the circumstances when the fees
are refundable.
(iv) Whether the fees are uniformly imposed.
(v) The voting power of franchisor-owned outlets on any fees imposed by
cooperatives. If franchisor-owned outlets have controlling voting power, disclose the maximum
and minimum fees that may be imposed.
Item 7: Estimated Initial Investment.
Disclose, in the following tabular form, the franchisee’s estimated initial investment. State
the title “YOUR ESTIMATED INITIAL INVESTMENT” in capital letters using bold type.
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DFPI-310.111 (Rev. 10-20) Page 29 of 84
Franchisors may include additional expenditure tables to show expenditure variations caused by
differences such as in site location and premises size.
Item 7 Table:
YOUR ESTIMATED INITIAL
INVESTMENT
Type of
expenditure
Amount
Method of
payment
When due
To whom payment
is to be made
Total.
(1) In column (1):
(i) List each type of expense, beginning with pre-opening expenses. Include the
following expenses, if applicable. Use footnotes to include remarks, definitions, or caveats that
elaborate on the information in the Table.
(A) The initial franchise fee.
(B) Training expenses.
(C) Real property, whether purchased or leased.
(D) Equipment, fixtures, other fixed assets, construction, remodeling, leasehold
improvements, and decorating costs, whether purchased or leased.
(E) Inventory to begin operating.
(F) Security deposits, utility deposits, business licenses, and other prepaid expenses.
(ii) List separately and by name any other specific required payments (for example,
additional training, travel, or advertising expenses) that the franchisee must make to begin
operations.
(iii) Include a category titled “Additional funds – [initial period]” for any other required
expenses the franchisee will incur before operations begin and during the initial period of
operations. State the initial period. A reasonable initial period is at least three months or a
reasonable period for the industry. Describe in general terms the factors, basis, and experience
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DFPI-310.111 (Rev. 10-20) Page 30 of 84
that the franchisor considered or relied upon in formulating the amount required for additional
funds.
(2) In column (2), state the amount of the payment. If the amount is unknown, use a
low-high range based on the franchisor’s current experience. If real property costs cannot be
estimated in a low-high range, describe the approximate size of the property and building and
the probable location of the building (for example, strip shopping center, mall, downtown, rural,
or highway).
(3) In column (3), state the method of payment.
(4) In column (4), state the due date.
(5) In column (5), state to whom payment will be made.
(6) Total the initial investment, incorporating ranges of fees, if used.
(7) In a footnote, state:
(i) Whether each payment is non-refundable, or describe the circumstances when
each payment is refundable.
(ii) If the franchisor or an affiliate finances part of the initial investment, the amount
that it will finance, the required down payment, the annual interest rate, rate factors, and the
estimated loan repayments. Franchisors may refer to Item 10 of this part for additional details.
Item 8: Restrictions on Sources of Products and Services.
Disclose the franchisee’s obligations to purchase or lease goods, services, supplies,
fixtures, equipment, inventory, computer hardware and software, real estate, or comparable
items related to establishing or operating the franchised business either from the franchisor, its
designee, or suppliers approved by the franchisor, or under the franchisor’s specifications.
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DFPI-310.111 (Rev. 10-20) Page 31 of 84
Include obligations to purchase imposed by the franchisor’s written agreement or by the
franchisor’s practice.
9
For each applicable obligation, state:
(1) The good or service required to be purchased or leased.
(2) Whether the franchisor or its affiliates are approved suppliers or the only approved
suppliers of that good or service.
(3) Any supplier in which an officer of the franchisor owns an interest.
(4) How the franchisor grants and revokes approval of alternative suppliers, including:
(i) Whether the franchisor’s criteria for approving suppliers are available to
franchisees.
(ii) Whether the franchisor permits franchisees to contract with alternative suppliers
who meet the franchisor’s criteria.
(iii) Any fees and procedures to secure approval to purchase from alternative suppliers.
(iv) The time period in which the franchisee will be notified of approval or disapproval.
(v) How approvals are revoked.
(5) Whether the franchisor issues specifications and standards to franchisees, sub
franchisees, or approved suppliers. If so, describe how the franchisor issues and modifies
specifications.
(6) Whether the franchisor or its affiliates will or may derive revenue or other material
consideration from required purchases or leases by franchisees. If so, describe the precise
basis by which the franchisor or its affiliates will or may derive that consideration by stating:
9
Franchisors may include the reason for the requirement. Franchisors need not disclose
in this Item the purchase or lease of goods or services provided as part of the franchise without a
separate charge (such as initial training, if the cost is included in the franchise fee). Describe
such fees in Item 5 of this section. Do not disclose fees already described in Item 6 of this part.
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DFPI-310.111 (Rev. 10-20) Page 32 of 84
(i) The franchisor’s total revenue.
10
(ii) The franchisor’s revenues from all required purchases and leases of products and
services.
(iii) The percentage of the franchisor’s total revenues that are from required purchases
or leases.
(iv) If the franchisor’s affiliates also sell or lease products or services to franchisees,
the affiliates’ revenues from those sales or leases.
(7) The estimated proportion of these required purchases and leases by the franchisee
to all purchases and leases by the franchisee of goods and services in establishing and
operating the franchised businesses.
(8) If a designated supplier will make payments to the franchisor from franchisee
purchases, disclose the basis for the payment (for example, specify a percentage or a flat
amount). For purposes of this disclosure, a “payment” includes the sale of similar goods or
services to the franchisor at a lower price than to franchisees.
(9) The existence of purchasing or distribution cooperatives.
(10) Whether the franchisor negotiates purchase arrangements with suppliers, including
price terms, for the benefit of franchisees.
(11) Whether the franchisor provides material benefits (for example, renewal or granting
additional franchises) to a franchisee based on a franchisee’s purchase of particular products or
services or use of particular suppliers.
Item 9: Franchisee’s Obligations.
Disclose, in the following tabular form, a list of the franchisee’s principal obligations. State
the title “FRANCHISEE’S OBLIGATIONS” in capital letters using bold type. Cross- reference
each listed obligation with any applicable section of the franchise or other agreement and with
the relevant disclosure document provision. If a particular obligation is not applicable, state “Not
Applicable”. Include additional obligations, as warranted.
10
Take figures from the franchisor’s most recent annual audited financial statement required in
Item 21 of this part. If audited statements are not yet required, or if the entity deriving the
income is an affiliate, disclose the sources of information used in computing revenues.
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 33 of 84
Item 9 Table:
FRANCHISEE’S
OB
LIGATIONS
[In bold] This table lists your principal obligations under the franchise and other
agreements. It will help you find more detailed information about your obligations in these
agreements and in other items of this disclosure document.
Obligation
Section in
agreement
Disclosure document
item
a. Site selection and acquisition/lease
b. Pre-opening purchase/leases
c. Site development and other p re-opening
requirements
d. Initial and ongoing training
e. Opening
f. Fees
g. Compliance with standards and policies/operating
manual
h. Trademarks and proprietary information
i. Restrictions on products/services offered
j. Warranty and customer service requirements
k. Territorial development and sales quotas
l. Ongoing product/service purchases
m. Maintenance, appearance, and remodeling
requirements
n. Insurance
o. Advertising
p. Indemnification
q. Owner’s participation/management/staffing
r. Record s and reports
s. Inspections and audits
t. Transfer
u. Renewal
v. Post-termination obligations
w. N on-competition covenants
x. Dispute resolution
y. Other (describe)
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 34 of 84
Item 10: Financing.
(1) Disclose the terms of each financing arrangement, including leases and installment
contracts, that the franchisor, its agent, or affiliates offer directly or indirectly to the franchisee.
11
The franchisor may summarize the terms of each financing arrangement in tabular form, using
footnotes to provide additional information. For a sample Item 10 table, see Appendix A of this
part. For each financing arrangement, state:
(i) What the financing covers (for example, the initial franchise fee, site acquisition,
construction or remodeling, initial or replacement equipment or fixtures, opening or ongoing
inventory or supplies, or other continuing expenses).
12
(ii) The identity of each lender providing financing and their relationship to the
franchisor (for example, affiliate).
(iii) The amount of financing offered or, if the amount depends on an actual cost that
may vary, the percentage of the cost that will be financed.
(iv) The rate of interest, plus finance charges, expressed on an annual basis. If the
rate of interest, plus finance charges, expressed on an annual basis, may differ depending on
when the financing is issued, state what that rate was on a specified recent date.
(v) The number of payments or the period of repayment.
(vi) The nature of any security interest required by the lender.
(vii) Whether a person other than the franchisee must personally guarantee the debt.
(viii) Whether the debt can be prepaid and the nature of any prepayment penalty.
applicable, state “Not Applicable.” Include additional obligations, as warranted.
11
Indirect offers of financing include a written arrangement between a franchisor or its
affiliate and a lender, for the lender to offer financing to a franchisee; an arrangement in which a
franchisor or its affiliate receives a benefit from a lender in exchange for financing a franchise
purchase; and a franchisor’s guarantee of a note, lease, or other obligation of the franchisee.
12
Include sample copies of the financing documents as an exhibit to Item 22 of this part.
Cite the section and name of the document containing the financing terms and conditions.
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 35 of 84
(ix) The franchisee’s potential liabilities upon default, including any:
(A) Accelerated obligation to pay the entire amount due;
(B) Obligations to pay court costs and attorney’s fees incurred in collecting the debt;
(C) Termination of the franchise; and
(D) Liabilities from cross defaults such as those resulting directly from non-payment, or
indirectly from the loss of business property.
(x) Other material financing terms.
(2) Disclose whether the loan agreement requires franchisees to waive defenses or
other legal rights (for example, confession of judgment), or bars franchisees from asserting a
defense against the lender, the lender’s assignee or the franchisor. If so, describe the relevant
provisions.
(3) Disclose whether the franchisor’s practice or intent is to sell, assign, or discount to
a third party all or part of the financing arrangement. If so, state:
(i) The assignment terms, including whether the franchisor will remain primarily
obligated to provide the financed goods or services; and
(ii) That the franchisee may lose all its defenses against the lender as a result of the
sale or assignment.
placing financing with the lender. If such payments exist:
(i) Disclose the amount or the method of determining the payment; and
(ii) Identify the source of the payment and the relationship of the source to the
franchisor or its affiliates.
Item 11: Franchisor’s Assistance, Advertising, Computer Systems, and Training.
Disclose the franchisor’s principal assistance and related obligations of both the
franchisor and franchisee as follows. For each obligation, cite the section number of the
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 36 of 84
franchise agreement imposing the obligation. Begin by stating the following sentence in bold
type: “Except as listed below, [the franchisor] is not required to provide you with any
assistance.”
(1) Disclose the franchisor’s pre-opening obligations to the franchisee, including any
assistance in:
(i) Locating a site and negotiating the purchase or lease of the site. If such assistance
is provided, state:
franchisee.
(B) Whether the franchisor selects the site or approves an area in which the franchisee
selects a site. If so, state further whether and how the franchisor must approve a franchisee-
selected site.
(C) The factors that the franchisor considers in selecting or approving sites (for
example, general location and neighborhood, traffic patterns, parking, size, physical
characteristics of existing buildings, and lease terms).
(D) The time limit for the franchisor to locate or approve or disapprove the site and the
consequences if the franchisor and franchisee cannot agree on a site.
(ii) Conforming the premises to local ordinances and building codes and obtaining any
required permits.
(iii) Constructing, remodeling, or decorating the premises.
(iv) Hiring and training employees.
(v) Providing for necessary equipment, signs, fixtures, opening inventory, and
supplies. If any such assistance is provided, state:
(A) Whether the franchisor provides these items directly or only provides the names of
approved suppliers.
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GUIDELINES FOR FRANCHISE REGISTRATION
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(B) Whether the franchisor provides written specifications for these items.
(2) Disclose the typical length of time between the earlier of the signing of the
franchise agreement or the first payment of consideration for the franchise and the opening of
the franchisee’s business. Describe the factors that may affect the time period, such as ability to
obtain a lease, financing or building permits, zoning and local ordinances, weather conditions,
shortages, or delayed installation of equipment, fixtures, and signs.
(3) Disclose the franchisor’s obligations to the franchisee during the operation of the
franchise, including any assistance in:
(i) Developing products or services the franchisee will offer to its customers.
(ii) Hiring and training employees.
(iii) Improving and developing the franchised business.
(iv) Establishing prices.
(v) Establishing and using administrative, bookkeeping, accounting, and inventory
control procedures.
(vi) Resolving operating problems encountered by the franchisee.
(4) Describe the advertising program for the franchise system, including the following:
(i) The franchisor’s obligation to conduct advertising, including:
(A) The media the franchisor may use.
(B) Whether media coverage is local, regional, or national.
(C) The source of the advertising (for example, an in-house advertising department or
a national or regional advertising agency).
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DFPI-310.111 (Rev. 10-20) Page 38 of 84
territory where the franchisee is located.
(ii) The circumstances when the franchisor will permit franchisees to use their own
advertising material.
(iii) Whether there is an advertising council composed of franchisees that advises the
franchisor on advertising policies. If so, disclose:
(A) How members of the council are selected.
(B) Whether the council serves in an advisory capacity only or has operational or
decision-making power.
(C) Whether the franchisor has the power to form, change, or dissolve the advertising
council.
(iv) Whether the franchisee must participate in a local or regional advertising
cooperative. If so, state:
(A) How the area or membership of the cooperative is defined.
(B) How much the franchisee must contribute to the fund and whether other
franchisees must contribute a different amount or at a different rate.
(C) Whether the franchisor-owned outlets must contribute to the fund and, if so,
whether those contributions are on the same basis as those for franchisees.
(D) Who is responsible for administering the cooperative (for example, franchisor,
franchisees, or advertising agency).
(E) Whether cooperatives must operate from written governing documents and
whether the documents are available for the franchisee to review.
(F) Whether cooperatives must prepare annual or periodic financial statements and
whether the statements are available for review by the franchisee.
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(G) Whether the franchisor has the power to require cooperatives to be formed,
changed, dissolved, or merged.
(v) Whether the franchisee must participate in any other advertising fund. If so, state:
(A) Who contributes to the fund.
(B) How much the franchisee must contribute to the fund and whether other
franchisees must contribute a different amount or at a different rate.
(C) Whether the franchisor-owned outlets must contribute to the fund and, if so,
whether it is on the same basis as franchisees.
(D) Who administers the fund.
(E) Whether the fund is audited and when it is audited.
(F) Whether financial statements of the fund are available for review by the franchisee.
(G) How the funds were used in the most recently concluded fiscal year, including the
percentages spent on production, media placement, administrative expenses, and a description
of any other use.
(vi) If not all advertising funds are spent in the fiscal year in which they accrue, how the
franchisor uses the remaining amount, including whether franchisees receive a periodic
accounting of how advertising fees are spent.
(vii) The percentage of advertising funds, if any, that the franchisor uses principally to
solicit new franchise sales.
(5) Disclose whether the franchisor requires the franchisee to buy or use electronic
cash registers or computer systems. If so, describe the systems generally in non-technical
language, including the types of data to be generated or stored in these systems, and state the
following:
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 40 of 84
(i) The cost of purchasing or leasing the systems.
(ii) Any obligation of the franchisor, any affiliate, or third party to provide ongoing
maintenance, repairs, upgrades, or updates.
(iii) Any obligations of the franchisee to upgrade or update any system during the term
of the franchise, and, if so, any contractual limitations on the frequency and cost of the
obligation.
(iv) The annual cost of any optional or required maintenance, updating, upgrading, or
support contracts.
(v) Whether the franchisor will have independent access to the information that will be
generated or stored in any electronic cash register or computer system. If so, describe the
information that the franchisor may access and whether there are any contractual limitations on
the franchisor’s right to access the information.
(6) Disclose the table of contents of the franchisor’s operating manual provided to
franchisees as of the franchisor’s last fiscal year-end or a more recent date. State the number of
pages devoted to each subject and the total number of pages in the manual as of this date. This
disclosure may be omitted if the franchisor offers the prospective franchisee the opportunity to
view the manual before buying the franchise.
(7) Disclose the franchisor’s training program as of the franchisor’s last fiscal year- end
or a more recent date.
(i) Describe the training program in the following tabular form. Title the table
“TRAINING PROGRAM” in capital letters and bold type.
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 41 of 84
Item 11 Table
TRAINING
PROGR
AM
Subject
Hours of Classroom
Training
Hours of On-The-
Job Training
Location
(A) In column (1), state the subjects taught.
(B) In column (2), state the hours of classroom training for each subject.
(C) In column (3), state the hours of on-the-job training for each subject.
(D) In column (4), state the location of the training for each subject.
(ii) State further:
(A) How often training classes are held and the nature of the location or facility where
training is held (for example, company, home, office, franchisor-owned store).
(B) The nature of instructional materials and the instructor’s experience, including the
instructor’s length of experience in the field and with the franchisor. State only experience
relevant to the subject taught and the franchisor’s operations.
(C) Any charges franchisees must pay for training and who must pay travel and living
expenses of the training program enrollees.
persons must complete the program to the franchisor’s satisfaction. If successful completion is
required, state how long after signing the agreement or before opening the business the training
must be completed. If training is not mandatory, state the percentage of new franchisees that
enrolled in the training program during the preceding 12 months.
(E) Whether additional training programs or refresher courses are required.
Item 12: Territory.
Disclose:
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DFPI-310.111 (Rev. 10-20) Page 42 of 84
(1) Whether the franchise is for a specific location or a location to be approved by the
franchisor.
(2) Any minimum territory granted to the franchisee (for example, a specific radius, a
distance sufficient to encompass a specified population, or another specific designation).
(3) The conditions under which the franchisor will approve the relocation of the
franchised business or the franchisee’s establishment of additional franchised outlets.
(4) Franchisee options, rights of first refusal, or similar rights to acquire additional
franchises.
(5) Whether the franchisor grants an exclusive territory.
(i) If the franchisor does not grant an exclusive territory, state: “You will not receive
an exclusive territory. You may face competition from other franchisees, from outlets that we
own, or from other channels of distribution or competitive brands that we control.”
(ii) If the franchisor grants an exclusive territory, disclose:
(A) Whether continuation of territorial exclusivity depends on achieving a certain sales
volume, market penetration, or other contingency, and the circumstances when the franchisee’s
territory may be altered. Describe any sales or other conditions. State the franchisor’s rights if
the franchisee fails to meet the requirements.
(B) Any other circumstances that permit the franchisor to modify the franchisee’s
territorial rights (for example, a population increase in the territory giving the franchisor the right
to grant an additional franchise in the area) and the effect of such modifications on the
franchisee’s rights.
(6) For all territories (exclusive and non-exclusive):
(i) Any restrictions on the franchisor from soliciting or accepting orders from
consumers inside the franchisee’s territory, including:
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DFPI-310.111 (Rev. 10-20) Page 43 of 84
(A) Whether the franchisor or an affiliate has used or reserves the right to use other
channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct
marketing sales, to make sales within the franchisee’s territory using the franchisor’s principal
trademarks.
(B) Whether the franchisor or an affiliate has used or reserves the right to use other
channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct
marketing, to make sales within the franchisee’s territory of products or services under
(C) Any compensation that the franchisor must pay for soliciting or accepting orders
from inside the franchisee’s territory.
(ii) Any restrictions on the franchisee from soliciting or accepting orders from
consumers outside of his or her territory, including whether the franchisee has the right to use
other channels of distribution, such as the Internet, catalog sales, telemarketing, or other direct
marketing, to make sales outside of his or her territory.
(iii) If the franchisor or an affiliate operates, franchises, or has plans to operate or
franchise a business under a different trademark and that business sells or will sell goods or
services similar to those the franchisee will offer, describe:
(A) The similar goods and services.
(B) The different trademark.
(C) Whether outlets will be franchisor owned or operated.
or accept orders within the franchisee’s territory.
(E) The timetable for the plan.
(F) How the franchisor will resolve conflicts between the franchisor and franchisees
and between the franchisees of each system regarding territory, customers, and franchisor
support.
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DFPI-310.111 (Rev. 10-20) Page 44 of 84
(G) The principal business address of the franchisor’s similar operating business. If it
is the same as the franchisor’s principal business address stated in Item 1 of this part, disclose
whether the franchisor maintains (or plans to maintain) physically separate offices and training
facilities for the similar competing business.
Item 13: Trademarks.
(1) Disclose each principal trademark to be licensed to the franchisee. For this Item,
“principal trademark” means the primary trademarks, service marks, names, logos, and
commercial symbols the franchisee will use to identify the franchised business. It may not
include every trademark the franchisor owns.
(2) Disclose whether each principal trademark is registered with the United States
Patent and Trademark Office. If so, state:
(i) The date and identification number of each trademark registration.
(ii) Whether the franchisor has filed all required affidavits.
(iii) Whether any registration has been renewed.
(iv) Whether the principal trademarks are registered on the Principal or Supplemental
Register of the United States Patent and Trademark Office.
(3) If the principal trademark is not registered with the United States Patent and
Trademark Office, state whether the franchisor has filed any trademark application, including any
“intent to use” application or an application based on actual use. If so, state the date and
identification number of the application.
(4) If the trademark is not registered on the Principal Register of the United States
Patent and Trademark Office, state: “We do not have a federal registration for our principal
trademark. Therefore, our trademark does not have many legal benefits and rights as a federally
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 45 of 84
registered trademark. If our right to use the trademark is challenged, you may have to change to
an alternative trademark, which may increase your expenses.”
(5) Disclose any currently effective material determinations of the United States Patent
and Trademark Office, the Trademark Trial and Appeal Board, or any state trademark
administrator or court; and any pending infringement, opposition, or cancellation proceeding.
Include infringement, opposition, or cancellation proceedings in which the franchisor
unsuccessfully sought to prevent registration of a trademark in order to protect a trademark
licensed by the franchisor. Describe how the determination affects the ownership, use, or
licensing of the trademark.
(6) Disclose any pending material federal or state court litigation regarding the
franchisor’s use or ownership rights in a trademark. For each pending action, disclose:
13
(i) The forum and case number.
(ii) The nature of claims made opposing the franchisor’s use of the trademark or by
the franchisor opposing another person’s use of the trademark.
(iii) Any effective court or administrative agency ruling in the matter.
(7) Disclose any currently effective agreements that significantly limit the franchisor’s
rights to use or license the use of trademarks listed in this section in a manner material to the
franchise. For each agreement, disclose:
(i) The manner and extent of the limitation or grant.
(ii) The extent to which the agreement may affect the franchisee.
(iii) The agreement’s duration.
(iv) The parties to the agreement.
13
The franchisor may include an attorney’s opinion relative to the merits of litigation or of
an action if the attorney issuing the opinion consents to its use. The text of the disclosure may
include a summary of the opinion if the full opinion is attached and the attorney issuing the
opinion consents to the use of the summary.
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(v) The circumstances when the agreement may be canceled or modified.
(vi) All other material terms.
(8) Disclose:
(i) Whether the franchisor must protect the franchisee’s right to use the principal
trademarks listed in this section, and must protect the franchisee against claims of infringement
or unfair competition arising out of the franchisee’s use of the trademarks.
(ii) The franchisee’s obligation to notify the franchisor of the use of, or claims of rights
to, a trademark identical to or confusingly similar to a trademark licensed to the franchisee.
when notified of these uses or claims.
proceedings or litigation involving a trademark licensed by the franchisor to the franchisee.
(v) Whether the franchise agreement requires the franchisor to participate in the
franchisee’s defense and/or indemnify the franchisee for expenses or damages if the franchisee
is a party to an administrative or judicial proceeding involving a trademark licensed by the
franchisor to the franchisee, or if the proceeding is resolved unfavorably to the franchisee.
(vi) The franchisee’s rights under the franchise agreement if the franchisor requires the
franchisee to modify or discontinue using a trademark.
(9) Disclose whether the franchisor knows of either superior prior rights or infringing
uses that could materially affect the franchisee’s use of the principal trademarks in the state
where the franchised business will be located. For each use of a principal trademark that the
franchisor believes is an infringement that could materially affect the franchisee’s use of a
trademark, disclose:
(i) The nature of the infringement.
(ii) The locations where the infringement is occurring.
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 47 of 84
(iii) The length of time of the infringement (to the extent known).
(iv) Any action taken or anticipated by the franchisor.
Item 14: Patents, Copyrights, and Proprietary Information.
that are material to the franchise. Also, disclose whether the franchisor has any pending patent
applications that are material to the franchise. If so, state:
(i) The nature of the patent, patent application, or copyright and its relationship to the
franchise.
(ii) For each patent:
(A) The duration of the patent.
(B) The type of patent (for example, mechanical, process, or design).
(C) The patent number, issuance date, and title.
(iii) For each patent application:
(A) The type of patent application (for example, mechanical, process, or design).
(B) The serial number, filing date, and title.
(iv) For each copyright:
(A) The duration of the copyright.
(B) The registration number and date.
(2) Describe any current material determination of the United States Patent and
Trademark Office, the United States Copyright Office, or a court regarding the patent or
copyright. Include the forum and matter number. Describe how the determination affects
the franchised business.
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DFPI-310.111 (Rev. 10-20) Page 48 of 84
(3) State the forum, case number, claims asserted, issues involved, and
effective determinations for any material proceeding pending in the United States Patent
and Trademark Office or any court.
14
(4) If an agreement limits the use of the patent, patent application, or copyright,
state the parties to and duration of the agreement, the extent to which the agreement may
affect the franchisee, and other material terms of the agreement.
(5) Disclose the franchisor’s obligation to protect the patent, patent application,
or copyright; and to defend the franchisee against claims arising from the franchisee’s use
of patented or copyrighted items, including:
(i) Whether the franchisor’s obligation is contingent upon the franchisee
is discretionary.
action when notified of infringement.
(iii) Who has the right to control any litigation.
(iv) Whether the franchisor must participate in the defense of a franchisee or
indemnify the franchisee for expenses or damages in a proceeding involving a patent,
patent application, or copyright licensed to the franchisee.
(v) Whether the franchisor’s obligation is contingent upon the franchisee
modifying or discontinuing the use of the subject matter covered by the patent or copyright.
(vi) The franchisee’s rights under the franchise agreement if the franchisor
requires the franchisee to modify or discontinue using the subject matter covered by the
patent or copyright.
(6) If the franchisor knows of any patent or copyright infringement that could
materially affect the franchisee, disclose:
14
If counsel consents, the franchisor may include a counsel’s opinion or a summary of the
opinion if the full opinion is attached.
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DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 49 of 84
(i) The nature of the infringement.
(ii) The locations where the infringement is occurring.
(iii) The length of time of the infringement (to the extent known).
(iv) Any action taken or anticipated by the franchisor.
(7) If the franchisor claims proprietary rights in other confidential information or
trade secrets, describe in general terms the proprietary information communicated to the
franchisee and the terms for use by the franchisee. The franchisor need only describe the
general nature of the proprietary information, such as whether a formula or recipe is
considered to be a trade secret.
Item 15: Obligation to Participate in the Actual Operation of the Franchise Business.
(1) Disclose the franchisee’s obligation to participate personally in the direct
operation of the franchisee’s business and whether the franchisor recommends
participation. Include obligations arising from any written agreement or from the
franchisor’s practice.
(2) If personal “on-premises” supervision is not required, disclose the following:
(i) If the franchisee is an individual, whether the franchisor recommends on-
premises supervision by the franchisee.
(ii) Limits on whom the franchisee can hire as an on-premises supervisor.
(iii) Whether an on-premises supervisor must successfully complete the
franchisor’s training program.
(iv) If the franchisee is a business entity, the amount of equity interest, if any, that
the on-premises supervisor must have in the franchisee’s business.
(3) Disclose any restrictions that the franchisee must place on its manager (for
example, maintain trade secrets, covenants not to compete).
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DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 50 of 84
Item 16: Restrictions on What the Franchisee May Sell.
Disclose any franchisor-imposed restrictions or conditions on the goods or services
that the franchisee may sell or that limit access to customers, including:
(1) Any obligation on the franchisee to sell only goods or services approved by
the franchisor.
(2) Any obligation on the franchisee to sell all goods or services authorized by
the franchisor.
(3) Whether the franchisor has the right to change the types of authorized goods
or services and whether there are limits on the franchisor’s right to make changes.
Item 17: Renewal, Termination, Transfer, and Dispute Resolution.
Disclose, in the following tabular form, a table that cross-references each
enumerated franchise relationship item with the applicable provision in the franchise or
related agreement. Title the table “THE FRANCHISE RELATIONSHIP” in capital letters
and bold type.
(1) Describe briefly each contractual provision. If a particular item is not
applicable, state “Not Applicable.”
(2) If the agreement is silent about one of the listed provisions, but the franchisor
unilaterally offers to provide certain benefits or protections to franchisees as a matter of
policy, use a footnote to describe the policy and state whether the policy is subject to
change.
(3) In the summary column for Item 17(c), state what the term "renewal" means
for
your
franchise system, including, if applicable, a statement that franchisees may be asked to
sign
a
contract with materially different terms and conditions than their original
contract.
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 51 of 84
Item 17 Table:
THE FRANCHISE
RE
LA
TIO
NSH
IP
[In bold] This table lists certain important provisions of the franchise and related agreements.
You should read these provisions in the agreements attached to this disclosure document.
P
rovision
Section in franchise
or
ot
her
agre
eme
nt
Summa
ry
a. Length of the franchise term
b. Renewal or extension of the term
c. Requirements for franchisee to renew/extend
d. Termination by franchisee
e. Termination by franchisor without cause
f. Termination by franchisor with cause
g. “Cause” defined - curable defaults
h. “Cause” defined - non-curable defaults
i. Franchisee’s obligations on termination/non-
renewal
j. Assignment of contract by franchisor
k. “Transfer” by franchisee - defined
l. Franchisor approval of transfer by franchisee
m. Conditions for franchisor approval of
transfer
n. Franchisor’s right of first refusal to acquire
franchisee’s business
o. Franchisor’s option to purchase franchisee’s
business
p. Death or disability of franchisee
q. N on-competition covenants during the term
of the franchise
r. N on-competition covenants after the
franchise is terminated or expires
s. Modification of the agreement
t. Integration/merger clause
u. Dispute resolution by arbitration or mediation
v. Choice of forum
w. Choice of law
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PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 52 of 84
Item 18: Public Figures.
Disclose:
(1) Any compensation or other benefit given or promised to a public figure
arising from either the use of the public figure in the franchise name or symbol, or the
public figure’s endorsement or recommendation of the franchise to prospective
franchisees.
(2) The extent to which the public figure is involved in the management or
control of the franchisor. Describe the public figure’s position and duties in the franchisor’s
business structure.
(3) The public figure’s total investment in the franchisor, including the amount
the public figure contributed in services performed or to be performed. State the type of
investment (for example, common stock, promissory note).
(4) For purposes of this section, a public figure means a person whose name or
physical appearance is generally known to the public in the geographic area where the
franchise will be located.
Item 19: Financial Performance Representations.
(1) Begin by stating the following:
The FTC’s Franchise Rule permits a franchisor to provide information about the
actual or potential financial performance of its franchised and/or franchisor-owned
outlets, if there is a reasonable basis for the information, and if the information is
included in the disclosure document. Financial performance information that differs
from that included in Item 19 may be given only if: (1) a franchisor provides the
actual records of an existing outlet you are considering buying; or (2) a franchisor
supplements the information provided in this Item 19, for example, by providing
information about possible performance at a particular location or under particular
circumstances.
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 53 of 84
(2) If a franchisor does not provide any financial performance representation in
Item 19, also state:
We do not make any representations about a franchisee’s future financial
performance or the past financial performance of company-owned or franchised
outlets. We also do not authorize our employees or representatives to make any
such representations either orally or in writing. If you are purchasing an existing
outlet, however, we may provide you with the actual records of that outlet. If you
receive any other financial performance information or projections of your future
income, you should report it to the franchisor’s management by contacting [name,
address, and telephone number], the Federal Trade Commission, and the
appropriate state regulatory agencies.
(3) If the franchisor makes any financial performance representation to
prospective franchisees, the franchisor must have a reasonable basis and written
substantiation for the representation at the time the representation is made and must state
the representation in the Item 19 disclosure. The franchisor must also disclose the
following:
(i) Whether the representation is an historic financial performance
representation about the franchise system’s existing outlets, or a subset of those outlets,
or is a forecast of the prospective franchisee’s future financial performance.
(ii) If the representation relates to past performance of the franchise system’s
existing outlets, the material bases for the representation, including:
(A) Whether the representation relates to the performance of all of the franchise
system’s existing outlets or only to a subset of outlets that share a particular set of
characteristics (for example, geographic location, type of location (such as free standing
vs. shopping center), degree of competition, length of time the outlets have operated,
services or goods sold, services supplied by the franchisor, and whether the outlets are
franchised or franchisor-owned or operated).
(B) The dates when the reported level of financial performance was achieved.
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 54 of 84
(C) The total number of outlets that existed in the relevant period and, if different,
the number of outlets that had the described characteristics.
(D) The number of outlets with the described characteristics whose actual
financial performance data were used in arriving at the representation.
(E) Of those outlets whose data were used in arriving at the representation, the
number and percent that actually attained or surpassed the stated results.
(F) Characteristics of the included outlets, such as those characteristics noted in
paragraph (3)(ii)(A) of this Item 19, that may differ materially from those of the outlet that
may be offered to a prospective franchisee.
(iii) If the representation is a forecast of future financial performance, state the
material bases and assumptions on which the projection is based. The material
assumptions underlying a forecast include significant factors upon which a franchisee’s
future results are expected to depend. These factors include, for example, economic or
market conditions that are basic to a franchisee’s operation, and encompass matters
affecting, among other things, a franchisee’s sales, the cost of goods or services sold, and
operating expenses.
(iv) A clear and conspicuous admonition that a new franchisee’s individual
financial results may differ from the result stated in the financial performance
representation.
(v) A statement that written substantiation for the financial performance
representation will be made available to the prospective franchisee upon reasonable
request.
(4) If a franchisor wishes to disclose only the actual operating results for a
specific outlet being offered for sale, it need not comply with this section, provided the
information is given only to potential purchasers of that outlet.
(5) If a franchisor furnishes financial performance information according to this
section, the franchisor may deliver to a prospective franchisee a supplemental financial
performance representation about a particular location or variation, apart from the
disclosure document. The supplemental representation must:
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL
PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 55 of 84
(i) Be in writing.
(ii) Explain the departure from the financial performance representation in the
disclosure document.
(iii) Be prepared in accordance with the requirements of paragraph (3)(i)-(iv) of
this
Item 19.
(iv) Be furnished to the prospective franchisee.
Item 20: Outlets and Franchisee Information.
(1) Disclose, in the following tabular form, the total number of franchised and
company-owned outlets for each of the franchisor’s last three fiscal years. For purposes of
this section, “outlet” includes outlets of a type substantially similar to that offered to the
prospective franchisee. A sample Item 20(1) Table.
Table No. 1
Systemwide Outlet
Summ
ary
For years [ ] to [ ]
Outlet Type
Year
Outlets at the
Start of the Year
Outlets at the
End of the Year
Net Change
Franchised
Company-
Owned
Total
Outlets
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PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 56 of 84
(i) In column (1), include three outlet categories titled “franchised,” “company-
owned, and “total outlets.”
(ii) In column (2), state the last three fiscal years.
(iii) In column (3), state the total number of each type of outlet operating at the
beginning of each fiscal year.
(iv) In column (4), state the total number of each type of outlet operating at the
end of each fiscal year.
(v) In column (5), state the net change, and indicate whether the change is
positive or negative, for each type of outlet during each fiscal year.
(2) Disclose, in the following tabular form, the number of franchised and
company- owned outlets and changes in the number and ownership of outlets located in
each state during each of the last three fiscal years. Except as noted, each change in
ownership shall be reported only once in the following tables. If multiple events occurred
in the process of transferring ownership of an outlet, report the event that occurred last in
time. If a single outlet changed ownership two or more times during the same fiscal year,
use footnotes to describe the types of changes involved and the order in which the
changes occurred.
(i) Disclose, in the following tabular form, the total number of franchised outlets
transferred in each state during each of the franchisor’s last three fiscal years. For
purposes of this section, “transfer” means the acquisition of a controlling interest in a
franchised outlet, during its term, by a person other than the franchisor or an affiliate. A
sample Item 20 (2) Table.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL
PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 57 of 84
Table No. 2
Transfers
of Outlets from Franchisees to New Owners (other than the
Franchisor)
For years [ ] to [ ]
State
Year
Number of Transfers
Total
(A) In column (1), list each state with one or more franchised outlets.
(B) In column (2), state the last three fiscal years.
(C) In column (3), state the total number of completed transfers in each state
during each fiscal year.
(ii) Disclose, in the following tabular form, the status of franchisee-owned outlets
located in each state for each of the franchisor’s last three fiscal years. A sample Item
20(3) Table.
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PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 58 of 84
Table No. 3
Status of
Franchised Ou
tlets
For years [ ] to [ ]
State
Year
Outlets at
Start of
Year
Outlets
Opened
Termina-
tions
Non-
Renewals
Reacquired
by
Franchisor
Ceased Opera
tions- Other
Reasons
Outlets
at End
of the
Year
AL
AZ
Totals
(A) In column (1), list each state with one or more franchised outlets.
(B) In column (2), state the last three fiscal years.
(C) In column (3), state the total number of franchised outlets in each state at the
start of each fiscal year.
(D) In column (4), state the total number of franchised outlets opened in each
state during each fiscal year. Include both new outlets and existing company-owned
outlets that a franchisee purchased from the franchisor. (Also report the number of
existing company-owned outlets that are sold to a franchisee in Column 7 of Table 4).
(E) In column (5), state the total number of franchised outlets that were
terminated in each state during each fiscal year. For purposes of this section,
“termination” means the franchisor’s termination of a franchise agreement prior to the end
of its term and without providing any consideration to the franchisee (whether by payment
or forgiveness or assumption of debt).
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(F) In column (6), state the total number of non-renewals in each state during
each fiscal year. For purposes of this section, “non-renewal” occurs when the franchise
agreement for a franchised outlet is not renewed at the end of its term.
(G) In column (7), state the total number of franchised outlets reacquired by the
franchisor in each state during each fiscal year. For purposes of this section, a
“reacquisition” means the franchisor’s acquisition for consideration (whether by payment or
forgiveness or assumption of debt) of a franchised outlet during its term. (Also report
franchised outlets reacquired by the franchisor in column 5 of Table 4).
(H) In column (8), state the total number of outlets in each state not operating as
one of the franchisor’s outlets at the end of each fiscal year for reasons other than
termination, non- renewal, or reacquisition by the franchisor.
(I) In column (9), state the total number of franchised outlets in each state at the
end of the fiscal year.
(iii) Disclose, in the following tabular form, the status of company-owned outlets
located in each state for each of the franchisor’s last three fiscal years. A sample Item
20(4) Table.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR
FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 60 of 84
Table No. 4
Status of
Company-Owned
Ou
tlets
For years [ ] to [ ]
State
Year
Outlets at
Start of the
Year
Outlets
Opened
Outlets
Reacquired
From
Franchisee
Outlets
Closed
Outlets Sold
to
Franchisee
Outlets at
End of the
Year
Totals
(A) In column (1), list each state with one or more company-owned outlets.
(B) In column (2), state the last three fiscal years.
(C) In column (3), state the total number of company-owned outlets in each state
at the start of the fiscal year.
(D) In column (4), state the total number of company-owned outlets opened in
each state during each fiscal year.
(E) In column (5), state the total number of franchised outlets reacquired from
franchisees in each state during each fiscal year.
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 61 of 84
(F) In column (6), state the total number of company-owned outlets closed in
each state during each fiscal year. Include both actual closures and instances when an
outlet ceases to operate under the franchisor’s trademark.
(G) In column (7), state the total number of company-owned outlets sold to
franchisees in each state during each fiscal year.
(H) In column (8), state the total number of company-owned outlets operating in
each state at the end of each fiscal year.
(3) Disclose, in the following tabular form, projected new franchised and
company- owned outlets. A sample Item 20(5) Table.
Table No. 5
Projected
Openings As Of [Last Day of Last Fiscal Ye
ar]
State
Franchise
Agreements Signed
But Outlet Not
Opened
Projected New
Franchised Outlet In The
Next Fiscal Year
Projected New Company-
Owned Outlet In the Next
Fiscal Year
Total
(i) In column (1), list each state where one or more franchised or company-
owned outlets are located or are projected to be located.
(ii) In column (2), state the total number franchise agreements that had been
signed for new outlets to be located in each state as of the end of the previous fiscal year
where the outlet had not yet opened.
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GUIDELINES FOR
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DFPI-310.111 (Rev. 10-20) Page 62 of 84
(iii) In column (3), state the total number of new franchised outlets in each state
projected to be opened during the next fiscal year.
(iv) In column (4), state the total number of new company-owned outlets in each
state that are projected to be opened during the next fiscal year.
(4) Disclose the names of all current franchisees and the address and
telephone number of each of their outlets. Alternatively, disclose this information for all
franchised outlets in the state, but if these franchised outlets total fewer than 100,
disclose this information for franchised outlets from contiguous states and then the next
closest states until at least 100 franchised outlets are listed.
(5) Disclose the name, city and state, and current business telephone number,
or if unknown, the last known home telephone number of every franchisee who had an
outlet terminated, canceled, not renewed, or otherwise voluntarily or involuntarily ceased to
do business under the franchise agreement during the most recently completed fiscal year
or who has not communicated with the franchisor within 10 weeks of the disclosure
document issuance date.
15
State in immediate conjunction with this information: “If you buy this franchise, your
contact information may be disclosed to other buyers when you leave the franchise
system.”
(6) If a franchisor is selling a previously-owned franchised outlet now under its
control, disclose the following additional information for that outlet for the last five fiscal
15
Franchisors may substitute alternative contact information at the request of the former
franchisee, such as a home address, post office address, or a personal or business email
address.
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 63 of 84
years. This information may be attached as an addendum to a disclosure document, or, if
disclosure has already been made, then in a supplement to the previously furnished
disclosure document.
(i) The name, city and state, current business telephone number, or if unknown,
last known home telephone number of each previous owner of the outlet;
(ii) The time period when each previous owner controlled the outlet;
(iii) The reason for each previous change in ownership (for example, termination,
non- renewal, voluntary transfer, ceased operations); and
(iv) The time period(s) when the franchisor retained control of the outlet (for
example, after termination, non-renewal, or reacquisition).
(7) Disclose whether franchisees signed confidentiality clauses during the last
three fiscal years. If so, state the following: “In some instances, current and former
franchisees sign provisions restricting their ability to speak openly about their experience
with [name of franchise system]. You may wish to speak with current and former
franchisees, but be aware that not all such franchisees will be able to communicate with
you.” Franchisors may also disclose the number and percentage of current and former
franchisees who during each of the last three fiscal years signed agreements that include
confidentiality clauses and may disclose the circumstances under which such clauses were
signed.
(8) Disclose, to the extent known, the name, address, telephone number, email
address, and Web address (to the extent known) of each trademark-specific franchisee
organization associated with the franchise system being offered, if such organization:
(i) Has been created, sponsored, or endorsed by the franchisor. If so, state the
relationship between the organization and the franchisor (for example, the organization
was created by the franchisor, sponsored by the franchisor, or endorsed by the franchisor).
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GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 64 of 84
(ii) Is incorporated or otherwise organized under state law and asks the
franchisor to be included in the franchisor’s disclosure document during the next fiscal
year. Such organizations must renew their request on an annual basis by submitting a
request no later than 60 days after the close the franchisor’s fiscal year. The franchisor
has no obligation to verify the organization’s continued existence at the end of each fiscal
year. Franchisors may also include the following statement: “The following independent
franchisee organizations have asked to be included in this disclosure document.”
Item 21: Financial Statements.
(1) Include the following financial statements prepared according to United
States generally accepted accounting principles, as revised by any future United States
government mandated accounting principles, or as permitted by the Securities and
Exchange Commission. Except as provided in paragraph (2) of this Item, these financial
statements must be audited by an independent certified public accountant using generally
accepted United States auditing standards. Present the required financial statements in a
tabular form that compares at least two fiscal years.
(i) The franchisor’s balance sheet for the previous two fiscal year-ends before
the disclosure document issuance date.
(ii) Statements of operations, stockholders equity, and cash flows for each of the
franchisor’s previous three fiscal years.
(iii) Instead of the financial disclosures required by paragraphs (1)(i) and (ii) of
this Item 21, the franchisor may include financial statements of any of its affiliates if the
affiliate’s financial statements satisfy paragraphs (1)(i) and (ii) of this Item 21 and the
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND
INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 65 of 84
affiliate absolutely and unconditionally guarantees to assume the duties and obligations of
the franchisor’s obligations to the franchisee, but need not extend to third parties. If this
alternative is used, attach a copy of the guarantee to the disclosure document.
(iv) When a franchisor owns a direct or beneficial controlling financial interest in
a subsidiary, its financial statements should reflect the financial condition of the franchisor
and its subsidiary.
(v) Include separate financial statements for the franchisor and any sub
franchisor, as well as for any parent that commits to perform post-sale obligations for the
franchisor or guarantees the franchisor’s obligations. Attach a copy of any guarantee to
the disclosure document.
(2) A start-up franchise system that does not yet have audited financial
statements may phase-in the use of audited financial statements by providing, at a
minimum, the following statements at the indicated times:
(i) The franchisor’s first partial or full
fiscal year selling franchises.
An unaudited
sheet.
opening balance
(ii) The franchisor’s second
year selling franchises.
fiscal
Audited balance sheet opinion as of
the end of the first partial or full fiscal
year selling franchises.
(iii) The franchisor’s third and
subsequent fiscal years selling
franchises.
All required financial statements for
the previous fiscal year, plus any
previously disclosed audited
statements that still must be
disclosed according to paragraphs
(1)(i) and (ii) of this Item 21.
(iv) Start-up franchisors may phase-in the disclosure of audited financial
statements, provided the franchisor:
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL
PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 66 of 84
(A) Prepares audited financial statements as soon as practicable.
(B) Prepares unaudited statements in a format that conforms as closely as
possible to audited statements.
(C) Includes one or more years of unaudited financial statements or clearly and
conspicuously discloses in this section that the franchisor has not been in business for
three years or more, and cannot include all financial statements required in paragraphs
(1)(i) and (ii) of this Item 21.
Item 22: Contracts.
Attach a copy of all proposed agreements regarding the franchise offering, including
the franchise agreement and any lease, options, and purchase agreements.
Item 23: Receipts.
Include two copies of the following detachable acknowledgment of receipt in the
following form as the last pages of the disclosure document:
(1) State the following:
Re
ce
ipt
This disclosure document summarizes certain provisions of the franchise
agreement and other information in plain language. Read this disclosure document
and all agreements carefully.
If [name of franchisor] offers you a franchise, it must provide this disclosure
document to you 14 calendar-days before you sign a binding agreement with, or
make a payment to, the franchisor or an affiliate in connection with the proposed
franchise sale.[o
r
soo
ne
r
if
required
by applicable state
la
w]
If [name of franchisor] does not deliver this disclosure document on time or if it
contains a false or misleading statement, or a material omission, a violation of
federal law and state law may have occurred and should be reported to the Federal
Trade Commission, Washington, D.C. 20580 and [state agency].
(2) Disclose the name, principal business address, and telephone number of
each franchise seller offering the franchise.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL
PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 67 of 84
(3) State the issuance date.
(4) If not disclosed in Item 1, state the name and address of the franchisor’s
registered agent authorized to receive service of process.
(5) State the following:
I received a disclosure document dated ________ Exhibits:
(6) List the title(s) of all attached Exhibits. that included the following
(7) Provide space for the prospective franchisee’s signature and date.
(8) Franchisors may include any specific instructions for returning the receipt (for
example, street address, email address, facsimile telephone
number
).
Appendix A: Sample Item 10
Tabl
e
SUMMARY OF FINANCING
OFFER
ED
Item
Financed
Source of
Financing
Down
Payment
Amount
Financed
Term
(Yrs)
Interest
Rate
Monthly
Payment
Prepay
Penalty
Security
Required
Liability
Upon
Default
Loss of
Legal
Right
on Default
Initial Fee
Land/
Constr
Leased
Space
Equip.
Lease
Equip.
Purchase
Opening
Inventory
Other
Financing
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR
FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 68 of 84
Appendix B: Sample Item 20(1) Table – System wide Outlet
Summ
ary
Systemwide Outlet
Summ
ary
For years 2012 to 2014
Outlet Type
Year
Outlets at the Start
of the Year
Outlets at the End
of the Year
Net Change
Franchised
2012
859
1,062
+203
2013
1,062
1,296
+234
2014
1,296
2,720
+1,424
Company
Owned
2012
125
145
+20
2013
145
76
-69
2014
76
141
+65
Total
Outlets
2012
984
1,207
+223
2013
1,207
1,372
+165
2014
1,372
2,861
+1,489
Appendix C: Sample Item 20(2) Table –
Transfers
of
Franchised Ou
tlets
Transfers
of Outlets from Franchisees to New Owners (other than the
Franchisor)
For years 2012 to 2014
State
Year
Number of Transfers
NC
2012
1
2013
0
2014
2
SC
2012
0
2013
0
2014
2
Total
2012
1
2013
0
2014
4
Appendix D: Sample Item 20(3) Table – Status of
Franchise Outlets
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR
FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 69 of 84
Status of
Franchise Outlets
For years 2012 to 2014
State
Year
Outlets at
Start of
Year
Outlets
Opened
Termination
s
Non-
Renewals
Reacquire
d by
Franchiso
r
Ceased
Operation
s- Other
Reasons
Outlets
at End
of the
Year
AL
2012
10
2
1
0
0
1
1
0
2013
11
5
0
1
0
0
1
5
2014
15
4
1
0
1
2
1
5
AZ
2012
20
5
0
0
0
0
2
5
2013
25
4
1
0
0
2
2
6
2014
26
4
0
0
0
0
3
0
Totals
2012
30
7
1
0
0
1
3
5
2013
36
9
1
1
0
2
4
1
2014
41
8
1
0
1
2
4
5
Appendix E: Sample Item 20(4) Table – Status of
Company-Owned
Ou
tlets
Status of
Company-Owned
Ou
tlets
For years 2012 to 2014
State
Year
Outlets at
Start of the
Year
Outlets
Opened
Outlets
Reacquired
From
Franchisees
Outlets
Closed
Outlets Sold
to
Franchisees
Outlets at
End of the
Year
NY
2012
1
0
1
0
0
2
2013
2
2
0
1
0
3
2014
3
0
0
3
0
0
OR
2012
4
0
1
0
0
5
2013
5
0
0
2
0
3
2014
3
0
0
0
1
2
Totals
2012
5
0
2
0
0
7
2013
7
2
0
3
0
6
2014
6
0
0
3
1
2
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL
PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 70 of 84
Appendix F: Sample Item 20(5) Table –
Projected
New
Franchised Outlets
Projected
New
Franchised Outlets
As of December 31, 2014
State
Franchise
Agreements Signed
But Outlet Not
Opened
Projected New
Franchised Outlet
in the Next Fiscal
Year
Projected New
Company-
Owned Outlets
in the Current
Fiscal Year
CO
2
3
1
NM
0
4
2
Total
2
7
3
*********
[ATTACHED
SEPARA
TEL
Y]
***********
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL
PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 71 of 84
Exhibit 2: Sample State
Cove
r
Page
STATE COVER
P
AG
E
Your state may have a franchise law that requires a franchisor to register or file with
a state franchise administrator before offering or selling in your state. REGISTRATION OF
A FRANCHISE BY A STATE DOES NOT MEAN THAT THE STATE RECOMMENDS THE
FRANCHISE OR HAS VERIFIED THE INFORMATION IN THIS DISCLOSURE
DOCUMENT.
Call the state franchise administrator listed in Exhibit
for information about the franchisor, or about franchising in your state.
MANY FRANCHISE AGREEMENTS DO NOT ALLOW YOU TO RENEW
UNCONDITIONALLY AFTER THE INITIAL TERM EXPIRES. YOU MAY HAVE TO SIGN
A NEW AGREEMENT WITH DIFFERENT TERMS AND CONDITIONS IN ORDER TO
CONTINUE TO OPERATE YOUR BUSINESS. BEFORE YOU BUY, CONSIDER WHAT
RIGHTS YOU HAVE TO RENEW YOUR FRANCHISE, IF ANY, AND WHAT TERMS YOU
MIGHT HAVE TO ACCEPT IN ORDER TO RENEW.
Please consider the following RISK FACTORS before you buy this franchise:
1. THE FRANCHISE AGREEMENT REQUIRES YOU TO RESOLVE
DISPUTES WITH US BY ARBITRATION ONLY IN MINNESOTA. OUT-OF-
STATE ARBITRATION MAY FORCE YOU TO ACCEPT A LESS
FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU
MORE TO ARBITRATE WITH US IN MINNESOTA THAN IN YOUR OWN
STATE.
2. THE FRANCHISE AGREEMENT STATES THAT MINNESOTA LAW
GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE
SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT
TO COMPARE THESE LAWS
3. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
We use the services of one or more FRANCHISE BROKERS or referral sources to
assist us in selling our franchise. A franchise broker or referral source represents us, not
you. We pay this person a fee for selling our franchise or referring you to us. You should
be sure to do your own investigation of the franchise.
Effective Date:
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION
AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 72 of 84
Form A UNIFORM FRANCHISE APPLICATION
(Insert ORG ID of Applicant)
Org-______________________
FEE: _____________________
APPLICATION FOR (Check only one):
☐REGISTRATION OF AN OFFER AND SALE OF FRANCHISES ($675)
☐RENEWAL OF REGISTRATION ($450)
☐NOTICE OF VIOLATION ($675)
☐MATERIAL MODIFICATION ($50)
☐POST-EFFECTIVE AMENDMENT ($50)
☐PRE-EFFECTIVE AMENDMENT ($0) DATED
______________________
1. ______________________________________________________________________
Full Legal Name of Franchisor: (If applicant is sub franchisor, the name of the sub franchisor.)
2. ______________________________________________________________________
Name under which the Franchisor is doing or intends to do business
3. ______________________________________________________________________
Franchisor's principal business address.
4. ______________________________________________________________________
Name and address of Franchisor's agent in the State of (Name of State) authorized to receive
process.
5. ______________________________________________________________________
Name, address and telephone number of sub franchisors, if any, for this state.
6. ______________________________________________________________________
Name, address and telephone number of person to whom communications regarding this
application should be directed.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20)
Page 73 of 84
Form B - Supplemental Information
SUPPLEMENTAL INFORMATION
1. Disclose:
A. The states in which this proposed registration application is effective.
B. The states in which this proposed registration application is or will be shortly on
file.
C. The states that have refused to register this franchise offering.
D. The states that have revoked or suspended the right to offer franchises.
E. The states in which this proposed registration of these franchises has been
withdrawn within the last five years, and the reasons for revocation or
suspension.
2.
Source of Funds for Establishing New Franchises
Disclose franchisor's total costs for performing its pre-opening obligations to provide
goods or services in connection with establishing each franchise, including real estate,
improvements, equipment, inventory, training and other items stated in the offering.
State separately the sources of all required funds.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 74 of 84
Form C – Certification
I certify under penalty of law that I have read and know the contents of this application and
the documents attached as exhibits and incorporated by reference and that the statements
in all these documents are true and correct.
Executed at ________________________________, ________________, 20___
____________________________________________
(Signature(s) of Franchisor and/or Subfranchisor)
By
_________________________________________
(Seal)
Title _______________________________________
STATE OF )
) ss.
COUNTY OF ____________________________
)
Personally appeared before me this _______ day of _____________ and, 20____
the above-named ______________________________ and _______________________
to me known to be the person(s) who executed the foregoing application (as
____________
and ___________________________
respectively, of the above-named applicant) and
(each), being first duly sworn, stated upon oath that said application, and all exhibits
submitted herewith, are true and correct.
______________________________
______________________________
(Notary)
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 75 of 84
CALIFORNIA ACKNOWLEDGMENT
(For use with Form C See “CA JURAT”)
A notary public or other officer completing this certificate verifies only the identity of the individual
who signed the document, to which this certificate is attached, and not the truthfulness, accuracy,
or validity of that document
State of California
County of _____________________________ )
On ________________________________________before me,
________________________________________(insert name and title of the officer) personally
appeared _____________________________________________________________________,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature _______________________________________ (Seal)
(regulatory authority)
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
D
FPI-310.111 (Rev. 10-20) Page 76 of 84
Form D
UNIFORM CONSENT TO SERVICE OF PROCESS
_________________________________, (a corporation organized under the laws of the
State
of ___________________) (a partnership) (an individual) _____________________________,
irrevocably appoints the __________________________
and the successors in office, its
attorney in the State of ___________________________ for service of notice, process or
pleading in an action or proceeding against it arising out of or in connection with the sale of
franchises, or a violation of the franchise laws of __________________, and consents that an
action or proceeding
against it may be commenced in a court of competent jurisdiction and
proper venue within ________________________________
by service of process upon this
officer with the same effect as if the undersigned was organized or created
under the laws of
_____________________________ and had lawfully been served with process in
_______________. It is requested that a copy of any notice, process or pleading served this
consent be mailed to:
______________________________________________________
(Name and address
)
______________________________________________________
Dated: ___________________________________, 20 _________.
By
_____________________________________
Title _____________________________________
By
_____________________________________
(SEAL)
Title ______________________________________
(Name of Notary)
(Name of Notary)
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 77 of 84
PROTECTION AND INNOVATION
CORPORATE ACKNOWLEDGMENT
STATE OF ______________________________)
) ss.
COUNTY OF ____________________________
)
On this ______________
day of____________________, 20______ , before
me,
____________________________, the undersigned officer personally appeared
________________ and _______________________ known personally to me to be the
__________________________ President and ___________________ Secretary, respectively, of
the above-named corporation, and that they, as such officers, being authorized to do so, executed
the foregoing instrument for the purposes therein contained, by signing the name of the corporation
by themselves as such officers.
IN WITNESS WHEREOF I have hereunto set my hand and official seal.
_____________________________________________ (Notary Public)
(NOTARIAL SEAL) My commission expires: _____________
INDIVIDUAL OR PARTNERSHIP ACKNOWLEDGMENT
STATE OF ______________________________)
) ss.
COUNTY OF ____________________________
)
On this _______________
day of__________________________, 20_____, before me,
__________________________________, the undersigned officer, personally appeared
___________________________________ to me personally known and known to me to be the
same person(s) whose name(s) is (are) signed to the foregoing instrument, and acknowledged the
execution thereof for the uses and purposes therein set forth.
IN WITNESS WHEREOF I have hereunto set my hand and official seal.
___________________________________________________
(Notary Public)
(NOTARIAL SEAL) My commission expires: _________________
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL
PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 78 of 84
Form E - Sales Agent Disclosure Form
SALES AGENT DISCLOSURE FORM
1. List the persons who will offer or sell franchises in this state. For each person state:
A. Name;
B. Business address and telephone number;
C. Home address and telephone number;
D. Present employer;
E. Present title;
F. Social Security Number;
G. Birthdate; and
H. Employment during the past five years. For each employment, state the name of
the employer, position held, and beginning and ending dates.
2. State whether any person identified in 1. above:
A. Has any administrative, civil or criminal action pending alleging a violation of
franchise or securities law, fraud, embezzlement, fraudulent conversion, restraint
of trade, unfair or deceptive practices, misappropriation of property or any
comparable allegations?
B. Had during the ten-year period immediately before the Disclosure Document
date:
1. been convicted of a felony or pleaded nolo contendere to a felony charge or
been held liable in a civil action by final judgment if the felony or civil action
involved a violation of franchise or securities law, fraud, embezzlement,
fraudulent conversion, restraint of trade, unfair or deceptive practices,
misappropriation of property or comparable violations of law?
YES ______ NO ______
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL
PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 79 of 84
2. entered into or been named in a consent judgment, decree, order or
assurance under federal or state franchise, securities, anti-trust, monopoly,
trade practice or trade regulation law?
YES ______ NO ______
3. been subject to an order or national securities association or national
securities exchange as defined in the Securities and Exchange Act of 1934
suspending or expelling the person from membership in the association or
exchange?
YES ______NO ______
C. For each above question answered "YES" state:
1. the name of the person or entity involved;
2. the court, agency, association or exchange involved;
3. a summary of the allegations;
4. if applicable, the date of the conviction, judgment, decree, order or assurance;
and
5. the penalty imposed, damages assessed, terms and conditions of the
judgment, decree, or order or assurance.
(Address)
(Address)
(Name of state or province)
(Effective date of renewal)
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
D
FPI-310.111 (Rev. 10-20) Page 80 of 84
Form F
GUARANTEE OF PERFORMANCE
For value received ____________________________________________ located
at___________________________________________ absolutely and unconditionally guarantees
the performance by_______________________________, located at _______________________,
of all of the obligations of __________________________________ under its franchise registration
in the State of ___________________________________dated _______________________and
of its Franchise Agreement. This guarantee continues until all obligations of __________________
under the franchise registration and franchise agreement are satisfied. _______________________
is not discharged from liability if a claim by the franchisee against ___________________________
remains outstanding. Notice of acceptance is waived. Notice of default on the part of
_______________________ is not waived. This guarantee is binding on ___________________
and on its successors and assignees.
___________________________________ executes this guarantee at ______________________
(Parent)
on the ___________ day of _____________________________20 _____.
_____________________________________
(Parent)
By: __________________________________
Title: _________________________________
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR
FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 81 of 84
STATE OF
CALIFORNIA DEPARTMENT
OF FINANCIAL PROTECTION
AND INNOVATION
INSTRUCTIONS
FOR
CUSTOMER
AUT
HORIZ
ATION
OF DISCLOSURE OF FINANCIAL RECORDS
FORM
On the reverse is a
Customer Authorization
of Disclosure of Financial Records form.
The
Commissioner of
Financial Protection and Innovation
is
authorized
to
require
such
authorities
from
certain
licensees and other persons
pursuant
to the
authority
cited in the
first
paragraph
of
the form.
The form must be
properly
executed and
submitted
with the
attached application for
license,
qualification, registration
or other
authority.
All
information required
on the form, except the
signature
of the person executing
the
form,
is to be
typew
r
itten.
If the form requests a
Department
of
Financial Protection and Innovation
file
number,
the
applicant
need
only
provide such
number
if it is known to the
applicant
and is the type of file
number
appropriate
for the license,
qualification, registration
or other
authority
applied for
in
the
attached ap
plication.
If
additional authorization
forms are needed, they may be obtained from any office of
the
Department
of
Financial Protection and Innovation
or
accurate
copies of the form may be
utilized by
applicants.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 82 of 84
STATE OF CALIFORNIA
DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
CUSTOMER AUTHORIZATION OF DISCLOSU
RE
OF FINANCIAL
RE
CORDS
Pursuant to Corporations Code section 31111 and Government Code sections 7470 and 7473,
any financial institution, wherever situated, possessing financial records of the sale of
________________________, a franchise registered under the California Franchise Investment
Law, by Name of Franchise
______________________________________________________________________
Name of Registrant Under the Franchise Investment Law
is hereby authorized to disclose to the California Department of Financial Protection and
Innovation records of the sale of the above-named registered franchise whether such records
relate to accounts which have been closed, accounts which are currently maintained, or accounts
which are hereafter established.
This authorization is effective as of the date of execution and shall remain effective until five years
after the expiration or revocation of the above-named franchise registration, including renewals of
such registration.
This authorization may not be revoked.
The terms used in this authorization shall have the definitions in the California Right to Financial
Privacy Act (Government Code section 7460 et seq.) and the Franchise Investment Law
(Corporations Code section 31000 et seq.)
The above-named registrant has duly caused this authorization to be signed on its behalf by the
undersigned, thereunto duly authorized.
Executed on_____________________
20
__________, at _______________________________
________________________________________
Name of Registrant
__________________________________________
Department of Financial Protection and
Innovation Application Number
By:
_______________________________________
__________________________________________
Title
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION
AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
DFPI-310.111 (Rev. 10-20) Page 83 of 84
BEFORE THE
DEPARTMENT OF FINANCIAL
PROTECTION AND INNOVATION OF
THE
STATE OF CALIFORNIA
(Under Corporations Code section 31113)
KNOW ALL MEN BY THESE PRESENTS:
That we , as principal,
and___________________________, a corporation, created, organized and existing under and
by virtue of the laws of the state of ______________________________________
, as surety,
are held and firmly bound
unto the State of California for the use thereof, and for the use of any
interested person or persons who may have a cause of action against the above-named principal
of said bond under the provisions of the Law entitled “Franchise Investment Law,” of the State of
California, in the aggregate sum of _______________, lawful money of the United States of
America, to be paid to the State of California, or to any person or persons, for the use and benefit
aforesaid, for which payment well and truly to be made, we bind ourselves, our heirs, executors,
administrators, successors and assigns, jointly and severally, firmly by these presents.
The condition of the above obligation is such that--
WHEREAS, The above-named principal has made application to the Commissioner of
Financial Protection and Innovation of the State of California for registration of franchises under
and pursuant to the Franchise Investment Law, and desires to furnish a bond under the
provisions of Corporations Code section 31113 and Section 310.113.5 of Title 10, California
Administrative Code in the penal sum above named, conditioned as herein set forth; and
WHEREAS, Corporations Code section 31113 requires that this bond be conditioned upon
the discharge by the franchisor of its (his) obligations under the franchise contract to provide real
estate, improvements, equipment, inventory, training and other items included in the offering of
franchises;
NOW, THEREFORE, If the said principal and any and all agents and employees
representing said principal shall faithfully conform to and abide by the provisions of the Law
entitled “Franchise Investment Law,” and of all rules and regulations made by the Commissioner
of Financial Protection and Innovation thereunder, and further shall pay to the State, and to such
person or persons, any and all amounts which may become due or owing to the State or to such
person or persons, from said principal under and by virtue of the provisions of said Law, then this
obligation is to be void, otherwise to remain in full force and effect.
STATE OF CALIFORNIA – DEPARTMENT OF FINANCIAL PROTECTION AND INNOVATION
GUIDELINES FOR FRANCHISE REGISTRATION
D
FPI-310.111 (Rev. 10-20) Page 84 of 84
This bond is subject to the following provisions:
1. That any person who sustains an injury covered by this bond, may, in addition to any
other remedy that he may have, bring an action in his own name upon this bond for the
recovery of any damage sustained by him.
2. That the total aggregate liability of the sureties herein for all claims which may arise
under this bond shall be limited to the payment of ________________.
3. That the surety or sureties may cancel this bond and be relieved of further liability
hereunder by delivering thirty days’ written notice to the Commissioner of Financial
Protection and Innovation of the State of California; however, such cancellation shall
not affect any liability incurred or accrued hereunder prior to the termination of said
thirty-day period.
4. That this bond shall remain in force and effect until the surety or sureties are released
from liability by said Commissioner, or until the bond is canceled by said surety or
sureties.
5. That the effective date of this bond shall be _____________________, 20 ________.
IN WITNESS WHEREOF, The seal and signature of the said principal is hereto affixed and
the corporate seal and the name of said surety is hereto affixed and attested by its duly authorized
officers at___________________________, California, this ___________________,
day of _____________________, 20______.
____________________________
Principal
_____________________________
Surety
